China Press Digest: Tuesday, August 15

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

Tuesday, August 15:

     The internationalization of the yuan should be achieved by relying on

capital projects to "export" the yuan, Sun Guofeng, director general of the

People's Bank of China's research institute, said at a conference Saturday,

Caixin reported late Monday. China can further internationalize the yuan by

making use of the One Belt One Road initiative to lend to countries involved in

the program in RMB. (Caixin)

     Given the PBOC's announcement that it will include negotiable certificates

of deposit (NCDs) with durations of less than one year issued by banks with

assets of more than CNY500 billion in these banks' quarterly Macro-Prudential

Assessments, NCD business is facing pressure from both the supply and demand

sides, the China Securities Journal reported Tuesday. Experts said the PBOC

measure would force commercial banks to further adjust the structure of their

liabilities, ending their high-speed "balance-sheet-expansion era." While

financial market deleveraging in the second half of the year will continue to

put pressure on the market, better coordination of financial supervision and the

government mandate to maintain "stability" will ensure there are no big shocks,

the newspaper said. (China Securities Journal)

     Weaker-than-expected economic data released Monday only show the economy

has "returned to normal status," in line with the downward trend from January to

May, as the better-than-expected performance of June may have been just "a

dream", the 21st Century Business Herald said in a front-page commentary

Tuesday. The steady slowing of Chinese economic growth is inevitable and there's

no "new growth cycle" as some analysts have argued recently. China's current

policy environment will determine the scope for economic growth in the period

ahead, as the government continues to campaign to deleverage financial markets,

control risks, curb asset bubbles and rein in local government debt, the

newspaper said. The strengthening of China's economic foundation and

transformation to sustainable growth is a long-term process and major challenge,

which means the traditional growth model that relies on ample credit will fade.

The market should be neither overly pessimistic or overly optimistic about the

outlook. (21st Century Business Herald)

     Hong Kong Financial Secretary Chen Maobo said HK housing prices have

already surpassed the level seen just before the Asian Financial Crisis of 1997,

the 21st Century Business Herald reported Tuesday. Chen was quoted as saying the

HK government has no intention to loosen its controls on the property market,

which date back to 2009. He said he worries that many activities in the current

property market "are unreasonable," according to the newspaper. In the first

five months of this year, the average price of a medium- to small-sized home in

HK rose 9.1% y/y to a level 76% higher than the peak in 1997. Though

transactions are still robust, the sector seems to have cooled down slightly

recently. (21st Century Business Herald)

--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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