China Press Digest: Tuesday, September 12

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

Sept. 12:

     Experts think overall bad-loan pressure on listed banks has fallen

significantly and asset quality of some has increasingly improved, the China

Securities Journal reported Tuesday. According to the China Banking Regulatory

Commission, outstanding bad loans at commercial banks were CNY1.64 trillion in

the second quarter and the bad-loan rate was 1.74% -- level with the quarter

before. The newspaper said asset quality of credit in general was stable but

divergence exists. The report quoted analysts saying adjustment of industrial

structures in the first half led to a more stable bad-loan rate for listed banks

-- but bad loan pressure still exists and divergence in the banking sector would

continue. New loans were mainly low-risk mortgages and in the infrastructure and

service sectors -- showing banks are generally cautious and their risk

preference isn't high. (China Securities Journal)

     Banking's emergence as the country's most profitable sector may not be a

good thing, The Securities Times said in a commentary Tuesday. Six banks --

Industrial & Commercial Bank of China, China Construction Bank, China

Agricultural Bank, Bank of China, Bank of Communications, and China Development

Bank -- are among the top 10 most profitable companies. Their total profit

exceeded CNY1 trillion -- or 36.6% of the total profit for the top 500

companies. A total of 245 manufacturers reported a combined net profit of

CNY549.31 billion -- or 19.53% of the total profit of the top 500. This disobeys

rules of economic development and causes frustration and worries that banks are

making too much money. Bank profits are eroding profits in the real economy --

especially manufacturing. Banks increasingly allocate capital not to the real

economy but to the financial sector which can cause asset bubbles and more

financial risks. Therefore, the central government needs to impose macroeconomic

controls such as regulating interest rates for loans, service fees and

inappropriate wealth management businesses. (The Securities Times)

     Yuan management should maintain methods which have proved effective, the

Economic Information Daily, a newspaper under the official Xinhua News Agency

said in a front-page commentary Tuesday. Recent appreciation of the yuan was a

result of a weakening of the dollar, a strong China economy and the addition of

counter-cyclical factors. As pressure on the yuan to depreciate reduces the

People's Bank of China decided to withdraw some temporary measures aimed at

specific problems -- and its decision to eliminate the foreign-exchange risk

provision of currency forward contracts is one of them, the newspaper said.

However, such action to decrease the effect of policies on the yuan doesn't mean

giving up on their influence. As the yuan strengthens the market may ask for

free fluctuation of the currency but foreign-exchange policies should be

appropriate and stable. They should aim for improvements but maintain stability,

the commentary said. (Economic Information Daily)

     Finance technology regulations must be strengthened as a result of risks,

according the People's Bank of China financial research department head Sun

Guofeng in an exclusive interview with the bank-managed Financial News. Recent

central-bank action against coin offerings is necessary and timely but doesn't

mean China is trying to stop the development of blockchain, Sun said. Blockchain

is good technology, Sun said. China's FinTech sector lacks regulation -- its

biggest problem, Sun said. (Financial News)

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

--MNI Singapore Bureau; +65 9023-5864; email: glen.perkinson@marketnews.com

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