MNI China Press Digest, July 19: Yuan, Lending, Investment

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

on Friday:

     The yuan FX rate has strong support and solid fundamentals to remain stable

in the long-term, said People's Daily in a front-page commentary today. Earlier

fluctuations were the result of changes in the external environment that affect

market expectations, which are controllable, the daily said, noting that the

yuan has risen steadily against the greenback since mid-June. The yuan will be

more flexible to fluctuate both ways, and China will not engage in competitive

devaluation, the paper said.

     Chinese banks may tighten lending to private-sector companies due to

growing defaults in the past week, 21st Century Business Herald reported today.

Citing an unnamed source at a small bank, the paper said they are only allowed

to lend to or provide bond financing service to private companies with a

crediting rating of AA+ or above, but in practice, few private companies will

get the approval -- even if they reach that rating level.

     The slowdown in property investment has spread in H1, with negative growth

seen not only in provinces across Middle and Western China, but provinces in the

Eastern China, including Guangdong and Shandong that are normally drivers of

growth, also saw a dip in H1, 21st Century Business Herald reported today.

Property investment is expected to decelerate further in H2 due to the tight

capital of developers and  weak sales of commercial housing, the paper said

citing Shen Xin, researcher at the E-House Real Estate Research Institute.

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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