China Press Digest: Tuesday, August 8

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

August 8:

     Debt-to-equity swaps should be a complimentary policy for dealing with

corporate debt -- not a main measure for deleveraging, the Economic Information

Daily said in a front-page commentary Tuesday. Swaps will accelerate in the

second half of this year with support from authorities but an abrupt or

excessive expansion will increase "moral risk" to economic development, it said.

Debt problems result from low returns from investment in the real economy --

which can't be solved by swaps alone. Market-oriented and legal guidance is

necessary for swaps to have an effect on deleveraging, it said. (Economic

Information Daily)

     The nonperforming loans ratio at commercial banks will continue to rise on

poor asset quality, the Financial News, a journal run by the People's Bank of

China, reported Tuesday quoting a report by the China Banking Association. Bank

assets and liabilities growth was maintained at 10% in the past two years, the

report said. Lower interest margins and higher credit costs are challenges to

increasing bank net profits. Market and liquidity risks will increase as the

financial environment changes and interest and foreign exchange rates are

volatile, the report said. (Financial News)

     The supply of land should be increased to help cool rising home prices in

Tier One cities, the 21st Century Business Herald reported Tuesday quoting the

former vice president of the Development Research Center of the State Council

Liu Shijin. Existing real-estate market regulations concentrate on the demand

side by restricting mortgages and purchases -- a short-term measure only, Liu

said. Changes on the supply side can alter market expectations for prices, Liu

said. Land available for residential construction should be increased to 40% of

the total land for urban construction by transferring some land at present zoned

industrial, Liu said. (21st Century Business Herald)

     Beijing's plan to introduce joint property ownership -- where homebuyers

and the government each own a share of homes but occupiers have full right of

use -- can prevent property-market risks and help people into their own homes,

the People's Daily said Tuesday. The plan aims to assist the overall property

market in the long term, the commentary said. Authorities need to prevent

speculation but still satisfy demand for home ownership, it said. (People's

Daily)

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

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