China Press Digest: Wednesday, August 30

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

Wednesday, August 30:

     The tight money supply in recent weeks is not necessarily a bad thing, the

China Securities Journal argued in a commentary Wednesday. Especially in the

past two weeks, liquidity has been unexpectedly tight, partly because of banks'

low excess reserve ratios. The People's Bank of China's restraining from

injecting much liquidity into the market under such circumstance may have the

aim of avoiding a rebound in banks' leverage ratios or act as a warning about a

rebound in bank issuance of negotiable certificates of deposit that took place

in July, the newspaper said. Though liquidity is tight and the central bank is

acting tough, it will motivate financial institutions to better manage their

liquidity and control leverage, the newspaper argued. (China Securities Journal)

     The yuan's recent appreciation against the dollar is beyond the

expectations of experts, but there are uncertainties whether the strengthening

can be sustained, the Economic Information Daily said in a front-page

commentary. The appreciation is mainly due to the weakening of the dollar, which

is related to uncertainties about Trump administration policies, the report

said. If the policies proposed by President Trump to stimulate the U.S. economy

are implemented, the dollar could rise to some extent, placing pressure on the

yuan exchange rate, the newspaper argued. Better management of yuan expectations

is the key to improving the exchange rate system this year, the newspaper

stressed. Only when the market sees the yuan fluctuate against a basket of

currencies with some pattern and rules can the credibility of exchange rate

policies be enhanced and unreasonable expectations be eliminated, it said.

(Economic Information Daily)

     Chinese Finance Minister Xiao Jie has stressed the need to tackle financial

risks, especially those caused by local-government debt and to curb illegal debt

issues, the People's Daily reported Wednesday. During the meeting of the

Standing Committee of the 12th People's Congress, Xiao said China needs to

further overhaul the income and spending relationship between local governments

and the central government. He also said China needs to use more high-quality

assets to attract investment to public-private partnership projects. (People's

Daily)

     Local governments in China are reluctant to disclose their fiscal

situations, and especially their debt conditions, a report by a research center

of the Tsinghua University School of Public Policy and Management said, the

China Economic Weekly reported. The research rated the average score on

transparency of local government debt disclosure at 20 out of a possible 100,

reflecting "poor disclosure," the report said. Yu Qiao, leader of the research

group, told the magazine that the central government's threat to hold officials

accountable makes local governments "very sensitive" toward disclosing their

debt details. Outside of debt, disclosure of fiscal conditions in 295 cities the

center monitored produced an average score of 49.33 out of 100 this year, higher

than the 44.62 last year. (China Economic Weekly)

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

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

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