MNI China Press Digest March 16: Liquidity, Banking Regulation

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

for Friday:

     China's liquidity condition may tighten later this month, China Securities

Journal reported Friday citing market participants. So far in the first quarter,

money market liquidity tends to be "loose and balanced," the Journal said. As

the U.S. Fed is about to announce its decision on U.S. benchmark interest rate,

the People's Bank of China may increase rates by open market operation. Banks

are also facing higher pressure as quarter-end macro-prudential assessment is

approaching, thus the current loose money supply will likely end: Journal.

     China's banking regulators are forcing banks to sell their high-risk assets

through legal markets such as the Beijing Financial Assets Exchange, China

Securities Journal reported Friday. Regulators have punished those that wanted

to keep these riskier but high-return assets by only temporarily moving them off

their balance sheets to meet regulatory requirement, the Journal said.

Regulators recently have clamped down on such illegal practices, the Journal

said. 

***Comment: China has made preventing financial risks a top priority this year.

Many local banks are unwilling to dispose of risky but high-rewarding assets.

With the regulatory reform soon to be introduced, banks will find it harder to

hide from supervision.

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

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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