China Press Digest: Friday, September 29

     BEIJING (MNI) - The following are highlights from the China press for

Friday, September 29:

     The Chinese bond market is entering a "slow bull" period, the Financial

News, a newspaper managed by the People's Bank of China, said Friday. As the

State Council meeting announced Wednesday, targeted cuts in banks' required

reserve ratios would boost financial institutions' support for micro-enterprises

and there is relatively high chance the PBOC will implement this policy within a

month, the newspaper said. The targeted reserve ratio cut could inject new

energy into the money and bond markets. But the report noted the signal of a

coming targeted RRR cut does not mean a change in the direction of China's

prudent and neutral monetary policy or the beginning of a "loose period" for

liquidity. As the third quarter is ending, many financial institutions are

positive about the bond market outlook in the fourth quarter, so the State

Council's announcement should further strengthens the market's optimism.

(Financial News)

     The yuan exchange rate will continue a "two-way" fluctuation in the future,

the China Securities Journal reported Friday. The weakening of the yuan in the

last several weeks has been due mainly to the rebound of the dollar index, the

People's Bank of China's new foreign exchange policy, and an increase in Chinese

companies' need to purchase foreign currencies. The yuan exchange rate against

the U.S. dollar will be driven by the two countries' economic fundamentals,

analysts were cited as saying. Given yuan depreciation expectations have

weakened, the Chinese currency could remain relatively strong for some time,

with its room to weaken limited, according to the newspaper. (China Securities

Journal)

     The Ministry of Commerce announced the government will close all North

Korean firms operating in China within 120 days of September 11, the day the

United Nations Security Council adopted the latest round of sanctions against

Pyongyang, the South China Morning Post reported Thursday. In the notice, the

ministry said all joint ventures with North Korean companies in China as well as

joint ventures set up overseas by the two countries or the citizens of the two

countries would be closed, but companies not within the sanctions eligibility or

those approved by UNSC would be exempt, according to the newspaper.

     The Ministry of Commerce confirmed Thursday it's compiling a "blacklist" of

rules to prevent irrational overseas investment by Chinese companies, listing

punishments for breaking the rules. The ministry is working with related

government bodies on the scheme, and China is "determined" to stop irrational

outbound investment and strengthen examination of the authenticity of companies'

outbound investments, according to ministry spokesman Gao Feng.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com

--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

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