MNI China Press Digest, Aug 29: Risks, Yuan, Real Estate

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

on Thursday:

     Chinese banking regulators are planning to roll out policies on the

disposal and restructuring of high-risk banks, Economic Information Daily

reported. At present, risky commercial banks can be taken over by state-owned

banks while in the future, regulators may allow rural commercial banks to seize

problematic agricultural commercial banks, rural credit cooperatives and town

banks, the newspaper said citing Dong Ximiao, a VP at the Chongyang Institute

for Financial Studies. Banks should take more responsibility through improving

their corporate governance and introducing new strategic investors, the report

said citing Wang Yifeng, the chief banking analyst at Everbright Securities.

     The Chinese yuan's break through the psychologically important level of

seven against the U.S. dollar would help drive the further liberalisation of the

exchange rate, according to a commentary in China Money, a PBOC-operated

magazine. The article, by Guan Tao, a former official at the State

Administration of Foreign Exchange, said the break through would unlock a wider

range which would strengthen the flexibility of the yuan and test the

adaptability of the market to currency fluctuation. Any shock from the yuan's

new level was quickly absorbed by the market, which had confidence in the

Government. Guan said the PBOC had shown its ability to manage market

expectations, and said the currency would not have a free fall.

     A number of banks have recently received window guidance to tighten their

lending to real estate developers, Tencent News reported citing unnamed sources.

The banks have been advised to maintain their property development loans at

end-March levels, the report says, meaning the balance of loans will be reduced

from CNY11.04 trillion at the end of Q2 to Q1's CNY10.85 trillion. Tencent says

this could also be reduced further.

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

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

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