MNI China Press Digest, Dec 18: LGFV, Special Bond, Inflation

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

on Wednesday:

     China should establish a financial risk warning system with different

levels of intervention, Securities Times reports. The Times cites Ma Jun, a

member of the PBOC's Monetary Policy Commission, who said that local governments

should take responsibility for managing possible risks triggered by their

implicit debts. Insolvent local government financing vehicles (LGFVs) should be

encouraged to integrate with other financial vehicles which have liquid assets,

according to Ma.

     There are signs of potential defaults from government infrastructure-backed

special purpose bonds as outstanding debts exceed revenues, according to a

report in the 21st Century Business Herald. The Herald's report cites Wang

Kebing, an inspector from the Budget Department at the Ministry of Finance, who

said that outstanding debt from the bonds was at CNY7.39 trillion against local

government fiscal revenue of CNY7.14 trillion in 2018. With the issuance of

special purpose bond increasing, local government should also broaden its

sources of income from infrastructure projects instead of relying on selling

land, Wang said.

     China's annual CPI gain is expected to be within the target range of around

3% as hog production gradually recovers, according to the National Development

and Reform Commission. Securities Daily cited comments from the Commission,

reporting that the number of live pigs was growing 2% m/m for the first time

since November 2018. CPI may rise above trend next year, the Commission said,

boosted by increased demand during the Chinese New Year Period. China's CPI grew

by 4.5% y/y in November, higher than October's 3.8%.

--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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