MNI China Press Digest Aug 18:Risk Prevention, Capital Gap, US

The following lists highlights from Chinese press reports on Wednesday:

• China's top economic leadership stressed the need to balance between preventing major financial risks and stabilizing economic recovery, defuse systemic risks and ensure overall economic and financial stability, Xinhua News Agency reported following a meeting of the Central Leading Group on Financial and Economic Affairs on Tuesday, chaired by President Xi Jinping. Authorities are also asked to promote common prosperity and expand the middle-income group, according to the Xinhua report. China will increase wealth adjustment measures including taxation, social securities and transfer payments, Xinhua said. China must increase the education of its people to create opportunities for more people to get rich while insisting on public ownership as the major entity along with diverse ownerships, Xinhua said.
• Chinese small and medium-sized banks could face as much as CNY5.34 trillion capital gap by 2022 as their hidden non-performing loans pile up due to policies deferring loan repayments for SMEs weakened by the pandemic, the 21st Century Business Herald reported citing a report by China Securities. Banks are accelerating capital replenishment since August to refinance with convertible bonds, private placement, perpetual bonds, as well as local government special bonds. The gradually exposed corporate credit defaults, increased non-performing assets and demand for write-off have accelerated capital consumption, the newspaper said citing Wen Bin, chief researcher of China Minsheng Bank. Many smaller banks are seeking capital because regulators want to treat them as "critical financial institutions" and place them under closer watch, with stricter requirements over capital and leverage ratios, the newspaper said.
• China will be keen to restore order in Afghanistan and promote reconstruction, but it has no obligation to help the U.S. get out of the "total disaster," the Global Times said in an editorial after Secretary of State Anthony Blinken spoke with Chinese Foreign Minister Wang Yi, which the newspaper said was the U.S. call for help to remedy the chaos it left in Afghanistan. Whether Beijing will help Washington depends on how the U.S. will act around China and cooperation must be mutually beneficial, the government-owned newspaper said. If any intended cooperation favours the U.S., Beijing will have to make Washington concede in some other area as reciprocity, the newspaper said. The U.S. is retreating from the Greater Middle East while strengthening its strategic structure around China, so China is not going to give the U.S. a hand, the newspaper said.