MNI China Press Digest May 23: Trade, Bond Issuance

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

Wednesday:

     U.S. President Donald Trump said the U.S. government has not reached any

consensus with the Chinese government regarding the ZTE issues, China Central

Television reported. Trump said he's not satisfied with the negations last week

in Washington led by Chinese Vice Premier Liu He and U.S. Treasury Secretary

Steven Mnuchin. Trump said he hopes the trade talks in the following days will

advance quickly. Trump said he may require ZTE to pay a penalty of up to $1.3

billion and replace managers, while very strict national security requirements

would be imposed on the Chinese tech giant, according to state media.

     A total of 300 credit bonds have been cancelled so far this year as the

high level of issuance last year has reduced capital available for the sector,

21st Century Business Herald reported. The cancelled value of bond issuance

reached CNY183.5 billion, the newspaper said, partly due to the CNY2.35 trillion

credit bond issuance ytd last year. New WMP rules tightening regulation on

regulatory arbitrage has forced companies to transfer their non-standard and

illegal financing to the bond market, thus related credit risks have been

transferred to the bond market, the newspaper said, citing an unidentified

fixed-income analyst. As credit bonds expand more bond defaults could happen,

the newspaper said, citing the fixed-income analyst.

     The PBOC-led newly issued rules regarding improving China's modern

financial system before 2020 stressed the country should control and tackle

short- and medium-term financial risks, Caixin reported. The document stressed

controlling risks in the bond market and monitoring high-leveraged companies

should be strengthened, according to Caixin. According to Caixin, key tasks

before 2020 also include: strictly preventing liquidity risks; resolving issues

of banks' bad assets and local government invisible debt; preventing a property

bubble from triggering financial risks; preventing large fluctuations in the

stock market and excessive speculation on the futures market; and controlling

cross-border capital flow risks.

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

--MNI Singapore Bureau; +65 8233 2326; email: Asia-Editor@marketnews.com

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