China Press Digest: Monday, August 14

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

Monday, August 14:

     U.S. officials confirmed Saturday that the U.S. will announce Monday an

investigation into China's trade practices on intellectual property rights,

according to both Chinese and American media sources. Reuters and Politico cited

U.S. officials saying in a conference call that the decision was not related to

the North Korea problem. On the Chinese side, the Securities Daily reported

Monday that the U.S. would negotiate with China to reduce trade barriers imposed

on the U.S. imports or seek compensation, Section 301 of U.S. trade law, which

would allow the U.S. to impose unilateral trade sanctions. Bai Ming, vice

chairman of international market research department under the Chinese Academy

of International Trade and Economic Cooperation at the Ministry of Commerce told

the Securities Daily the U.S. is very likely to try to demonstrate its

deterrence but would also balance the benefits and disadvantages of its trade

action because the U.S. does not want to "give up on the Chinese market which is

growing continuously." He also expects the U.S. will change its attitude

frequently during the process.

     The People's Bank of China aims to tighten controls on negotiable

certificates of deposit (NCDs), the issuance of which has skyrocketed in recent

years, in order to rein in financial risks, Economic Information Daily reported

Monday. The central bank announced Friday that it would include NCDs with

durations of less than one year issued by banks with assets of more than CNY500

million in its quarterly macro-prudential assessment of banks' operating

conditions. The newspaper's front-page report cited Xu Chengyuan, chief analyst

at China Orient Asset Management Co. Ltd, as saying the fact that the PBOC would

add these NCDs to its MPA from the first quarter of 2018 leaves "buffer time"

for the 35 banks whose NCDs fall within the PBOC examination criteria to adjust

and so would avoid major fluctuation in the market. Xu also noted the measure is

only the first step in tightening supervision of NCDs, with financial regulators

continuing to create and implement new policies based on market developments.

(Economic Information Daily)

     The yuan rose significantly last week and will continue its "two-way

fluctuation" as depreciation expectations continue to fade, the Securities Daily

reported Monday. Li Huiyong, chief analyst of Shenwan Hongyuan Securities, told

the newspaper Sunday the CFETS index has risen to 93.8 as of Thursday, higher

than the year-to-date average level. Li said the U.S. dollar still has room to

appreciate given the U.S. economy is expected to report robust growth. China's

economic growth is stable, and with the new counter-cyclical factor added to the

People's Bank of China's calculation of the daily yuan parity, the yuan would

continue to show "two-way" fluctuation, the newspaper said. (Securities Daily)

     China needs to speed up formation of a sustainable system for developing

the property market, the People's Daily reported Monday. Such a system is

essential for the stable transformation of the country's economy, the newspaper

said, noting that the last financial crisis were caused by a bursting of a

property market bubble. With a high proportion of housing sales due to

speculation, high housing inventories and high leverage ratios, the current

situation requires China to continue to rein in surging housing prices and

tackle potential risks. (People's Daily)

     Financial News, a newspaper run by the People's Bank of China, stressed

Monday the need to maintain stability while China takes measures in managing the

rising level of local government debt. Participants in the market widely support

the strengthening of controls on local debt levels, but the process needs to

maintain stability as it is the main theme of financial regulation in the

country now, the newspaper said in a front-page report. China faces pressure

from an economic slowdown and local governments are facing difficulties

maintaining the high fiscal income levels needed for debt service as their

economic growth inevitably ends its "abnormal growth period." (Financial News)

--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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