MNI China Press Digest, Aug 21: Trust Companies, Deleveraging

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

Tuesday:

     A regulation draft on trust companies has been issued to local banking

regulators, with rules no stricter than the general wealth management product

rules announced earlier this year, China Securities Journal reported, citing

unidentified insiders. The document categorises the so-called "channel

businesses" -- banks using trust companies as a channel to move assets

off-balance sheets -- into "good will and bad will", which will stop the "bad

will" channel businesses while allowing the "good will" ones to continue. It is

uncertain whether the specific rule on channel business will be written into the

final guidance, the newspaper noted. 

***Comments: Less strict WMP rules indicate the government's efforts to provide

some relief to financial institutions and slow deleveraging, amid pressures to

hit the annual GDP target during the ongoing trade war with the U.S.

     Chinese authorities have confirmed an undisclosed timetable for its

deleveraging in the near future, which aims to fully use the market system to

advance deleveraging, Economic Information Daily reported. According to the

timetable, issuance of related policies will be added at an accelerated pace

over the remainder of this year, as the newspaper learned from the National

Development and Reform Commission. Policies on cleaning zombie companies out of

the market will be further improved, the newspaper said, to speed up

high-leverage and low-efficiency companies exiting the market. Market-based

debt-to-equity swaps will be further used to help high-leverage but promising

companies to reduce their leverage, it said.

     Chinese regulators may require financial trust companies to stop financing

selected property companies, amid tightening controls over credit to

high-leveraged property developers, China Securities Journal reported. Rumour

has it that banking regulators have issued a document, not disclosed publicly,

to banks in Fujian, Zhejiang, Jiangsu and Shanghai, which requires a pause in

new financing from financial trust companies to property companies, the

newspaper said. Only some companies received window guidance from regulators

prohibiting new borrowing from financial trusts, and the window guidance is not

targeting the whole property sector, the newspaper said, citing a high-level

manager of a financial trust.

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

--MNI Beijing Bureau; +86-10-8532-5998; email: beijing@marketnews.com

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