MNI China Press Digest: Friday, January 5

     BEIJING (MNI) - The following are highlights from the China press for

Friday, January 5:  

     Chinese growth will be driven by investment and consumption this year, the

Economic Information Daily, a newspaper under the official Xinhua News Agency,

reported Friday. Fixed-asset investment is expected to be rise about 6.5% this

year, boosted by investment in the manufacturing sector, the newspaper said,

citing various sources. Consumption growth is projected to be 10%. With

investment in infrastructure and the property sector still under tight

supervision as the government clamps down on financial risks, the highlight of

investment growth will be in the manufacturing sector, which will enhance return

on investment through innovation, the newspaper cited one source as saying.

Investment and consumption will focus on industries with high value-added, the

newspaper said. (Economic Information Daily)

     The issuance of negotiable certificates of deposit (NCDs) dropped rapidly

last year and 2018 will see a further decline due to tighter government

regulations, the Shanghai Securities News reported Friday. As of Thursday,

issuance quotas for this year reported by 670 banks were well below the level in

2017, the newspaper said, without revealing the aggregate decline. Some banks

cut their issuance quotas as much as 60% from last year, the newspaper said.

Financing via NCDs dropped for the first time in 2017, to CNY1.72 trillion, half

of the total in 2016, according to the newspaper. The decreasing reliance on

NCDs for funding means banks must restructure their debt portfolios and find new

ways to raise funds, the newspaper said. The decline in NCDs puts particular

pressure on medium- and small-sized banks, which are much less competitive in

attracting deposits than larger institutions. These banks may be forced to

shrink their balance sheets to offset the lack of financing. (Shanghai

Securities News)

     With the Chinese government signaling it will maintain the basic stability

of the yuan, it is hard to envision large fluctuations in the U.S. dollar-yuan

exchange rate this year, the China Securities Journal said in a front-page

commentary. The external environment is relatively beneficial for the yuan, with

non-dollar currencies expected to play a bigger role in the foreign exchange

market, the newspaper said. The fluctuation of the dollar was an important

reason for the appreciation or depreciation of the yuan in 2017 and will remain

an important influence. But whether the dollar-yuan exchange rate continues to

strengthen depends most on the performance of China's domestic economy and

Chinese government economic policies. China's economic growth is expected to

slow but downside risks are limited, and monetary policy and financial

supervision are very likely remain restrictive, so the yuan won't experience

large jumps or declines this year, the newspaper argued. (China Securities

Journal)

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

--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

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