China Press Digest: Tuesday, October 17

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

Tuesday, October 17:

     China's economic growth has not entered a "new cycle" and so the country

should continue its supply-side reforms and seek new growth engines, the State

Information Center's chief economist, Zhu Baoliang, said Tuesday in a commentary

in the 21st Century Business Herald. China's recent robust economic growth was

due to a stable program of infrastructure construction. China needs to tackle

four problems in the future, Zhu said: reforming state-owned enterprises;

establishing a long-term system for development of the property sector; dealing

with local government debt; and balancing the yuan exchange rate. Monetary

policy needs to be tight, Zhu said, and China needs to continue deleveraging,

strengthen controls of the property market and squeeze speculative capital out

of the market. At the same time, fiscal policy should maintain a certain level

of looseness, and local government debt risks should be strictly limited, he

argued. If the above issues were tackled within three to five years, it would

provide a beneficial environment for China's economic restructuring, Zhu

concluded. (21st Century Business Herald)

     The yuan central parity in the fourth quarter will fluctuate between CNY6.4

to CNY6.8 to the dollar, the Securities Daily reported Tuesday, citing the

prediction by China Communications Bank Chief Economist Lian Ping. Lian said the

yuan exchange rate is unlikely to experience a appreciation or depreciation of

more than 10%, but will probably periodically fluctuate in both directions.

Huang Zhilong, director of the macro-economy center at the Suning Financial

Research Institute, told the newspaper that the yuan depends on the central

bank's judgment on the exchange rate outlook as well as China's economic growth

outlook. Huang said the chance for China's economy to drop is not large and so

the economy can support yuan stability. (Securities Daily)

     It's time for the Chinese government to officially authorize the creation

of real estate investment trusts (REITS), the Economic Information Daily said

Tuesday in a front-page article. The China Securities Regulatory Commission is

speeding up the development of policies and regulations to allow for the launch

of REITS in China. With some experts predicting that one-third of China's

population could become housing renters in coming years, and the government

encouraging the development of a rental market to satisfy housing demand and

help keep a lid on housing prices, REITs would help meet the demand for

investment to fund rental housing, the newspaper argued. (Economic Information

Daily)

     The development of asset management companies in China has big potential,

the China Securities Journal reported Monday. Banks' bad-loan ratios are

expected to increase steadily, raising the value of the market for managing

these bad assets to more than CNY1 trillion. So far, 60 local-level asset

management companies have been established, mostly controlled by local

governments because of their high profits and because of their need for risk

controls. But private and listed companies as well as state-owned institutions

are actively investing in asset management companies, and experts predict that

the room for those companies to participate in the market is still large, the

newspaper said. (China Securities Journal)

--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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