MNI China Press Digest, April 26:Rate, Housing, Infrastructure

     BEIJING (MNI) - The following lists highlights from Chinese press reports

on Friday:

     Banks should not be encouraged to lower lending rates for small and

micro-sized enterprises below the benchmark interest rate according to Sina

Finance, citing Li Junfeng, director of the Financial Inclusion Department at

the China Banking and Insurance Regulatory Commission. Banks are recommended to

price their rates based on the principle of "guaranteeing the benefits" and

commercial sustainability, the newspaper said citing Li, who warned that lower

rates could lead to regulatory arbitrage. The breakeven interest rate should be

between 5% and 5.7% if the rate of non-performing loans is kept below 3%, Li

said.

     Housing prices in 23 out of 100 cities surveyed by the Shanghai E-House

Real Estate Research Institute have increased more than 20% y/y in the first

quarter, the Economic Information Daily reported. In some cities the growth of

mortgages and rises in house prices have occurred simultaneously, the Daily

said, while describing some areas of the market as "overheated". Regulations on

mortgages and land transactions could be further tightened in the second

quarter, the newspaper said citing Yan Yuejin, director of the E-House Real

Estate Research Institute.

     Current interest rates and inflation are at a low level and are beneficial

for raising funds to boost infrastructure, reported 21st Century Business Herald

citing Zhou Xiaochuan, a former governor of the PBOC. Commercial funds should

play a major role in infrastructure construction as their involvement can ensure

the sustainability of the projects and avoid moral hazard in government

investments, the newspaper said citing Zhou.

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

--MNI Sydney Bureau; +61 405322399; email: lachlan.colquhoun.ext@marketnews.com

[TOPICS: M$A$$$,M$Q$$$,MI$$$$]