China Press Digest: Thursday, August 24

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

Aug. 24:

     The Industrial and Commercial Bank of China (ICBC), the country's largest

bank by assets, will increase control of its interbank transactions and improve

its credit risk prevention, the Shanghai Securities News reported Thursday,

citing Yi Huiman, the bank's chairman. ICBC pledges that outstanding interbank

assets will not surpass 10% of total liabilities, Yi said, and its leverage

ratio from wealth management products will not exceed 1.4 times. The bank will

focus on credit management and improve its capacity for absorbing and resolving

risks. ICBC is committed to operating in a prudent way, maintaining stability in

liquidity, the yuan exchange rate and interest rates, and playing a positive

role in guiding market expectations and reducing volatility, Yi stressed.

(Shanghai Securities News)

     The overhaul of state-owned enterprises run by the central government will

accelerate and strengthen the government's deleveraging campaign, Premier Li

Keqiang said Wednesday in an executive meeting of the State Council, according

to the government's website. These SOEs are encouraged to concentrate on mergers

and reorganization, Li said, and the government will take measures to deal with

"zombie companies" and excess production capacity in the coal and steel sectors.

The reduction of SOEs' debt-to-asset ratios is the government's top priority, Li

stressed. The State Council meeting also discussed the need to expand

market-oriented debt-for-equity swaps as part of SOE reforms.

     Issuance of negotiable certificates of deposit (NCDs) contracted sharply in

August because of tightened regulation, the Economic Information Daily reported

Thursday. As of Aug. 21, total issuance of NCDs stood at CNY1.09 trillion, down

from CNY2 trillion in June and CNY1.5 trillion in July. Last week, issuance was

less than maturing NCDs for the first time since July, resulting in a negative

net funding volume of CNY42.13 billion, the newspaper said. The increase in

money market rates resulting from the government's deleveraging campaign is the

main reason for the contraction, the report argued. Plus, regulators are

expected to consider rules for money market funds that would limit their ability

to buy NCDs issued by low-rated institutions, which would further reduce NCD

issuance, the report warned. (Economic Information Daily)

     China will continue to scrutinize the authenticity and compliance of

outbound direct investment (ODI) while promoting legal investment, Caixin, a

prominent financial magazine, reported Thursday, citing Guo Song, director of

the Capital Account Management Department of the State Administration of Foreign

Exchange. Any rapid expansion of ODI could easily trigger risks with foreign

exchange, push up prices of foreign assets and worsen capital outflows, Guo

said. Regulators have noticed that some companies have transferred capital in

the name of ODI but instead invested illegally in foreign equity markets.

Regulators will support overseas mergers and acquisitions in a market-oriented

way, following the guidelines of the "Going Out" strategy and the "One Belt, One

Road" initiative, Guo said. (Caixin Magazine)

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

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

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

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