MNI China Press Digest, July 30: Infrastructure, Govt Bonds

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

Monday:

     Infrastructure investment, especially in transportation and public service

facilities, is expected to accelerate in the second half of the year, along with

an acceleration in local government bond issuance this year at CNY1.35 trillion,

Shanghai Securities News reported. China's annual growth in infrastructure

investment is likely to reach between 13% and 15%, the newspaper said, citing

Huatai Securities. CNY1 trillion in local government bonds, including land

reserve bonds, highway bonds and shantytown renovation bonds, will be used to

raise funds for major infrastructure projects, Huatai Securities said, according

to the newspaper.

     Government bonds are seeing some fluctuations in response to China's looser

monetary policy and more active fiscal policy, China Securities Journal

reported. The trend of government bonds will be determined by the strength of

liquidity injections and the possibility of shifting from "stable credit" to

"loose credit," the newspaper said, citing institutions including Orient

Securities Futures. With the alleviation of credit defaults crises, risk

preference will rise and capital will be redistributed from high-rated credit

bonds to middle- and low-rated credit bonds, the newspaper said, citing Golden

Credit Rating.

     Financial institutions should set a transition period for the

implementation of new asset management rules and tailor the rules to specific

cases, said Tao Ling, vice director of Financial Stability Board of the PBOC

according to Shanghai Securities. The new rules are aimed at creating a

beneficial environment for new products, to increase financing sources for the

real economy, Tao said. Regulations on non-standard assets will continue to be

tight, but public fund management products are allowed to invest in non-standard

assets, which partly finance the real economy, Tao said. The PBOC will soon

publish rules on transferring non-standard assets to standard assets, Tao

promised, according to the newspaper.

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

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

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