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China Press Digest: Thursday, August 3

     BEIJING (MNI) - The following are highlights from the China press for
Thursday, August 3:
     Banks need to raise capital because of interest-rate differentials, asset
quality and increased government supervision, the Economic Information Daily
reported Thursday. Some banks are issuing convertible bonds -- and total
issuance may rise to CNY125.2 billion, the report said. Banks must increase
asset growth at a 13% year-over-year pace to maintain leverage levels and for
the country to maintain a 6.5% GDP growth rate, according to the Bank of China's
Finance Research Institute's Xiong Qiyue. However, this will be difficult in the
current environment and pressure on banks is increasing as the growth rate of
capital is slower than that of assets. The government's deleveraging campaign,
macro-prudential assessment, a clampdown on illegal practices in interbank
certificates of deposits and bank's wealth-product management are making banks'
need for capital replenishment more urgent. (Economic Information Daily)
     The environment nurturing "grey rhinos" -- including shadow banking,
property bubbles and illegal financing -- must be changed to prevent
financial-sector risks, according to a front-page commentary in the Economic
Information Daily, an official Xinhua News Agency newspaper. Grey rhinos are
caused by credit relationships and asset allocation of microeconomic
participants. Those responsible for some economic costs should provide insurance
for some assets and need to be identified. The "morals" of market participants
must improve, the commentary said. (Economic Information Daily)
--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]

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