MNI China Press Digest: Monday, Nov. 20

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

Monday, Nov. 20:

     The yuan's status in the world continues to rise and China's financial

markets continue to open up, People's Daily, a government mouthpiece, said

Monday in a front-page commentary. China has reduced foreign-exchange risks and

made trade and investment more convenient through bilateral currency swaps, the

Renminbi Qualified Foreign Institutional Investor (RQFII) program, outright

monetary transactions, renminbi clearing banks and the Cross-Border Interbank

Payment System. China will stick to further opening up markets, improving the

pricing process for the yuan exchange rate and reducing controls on capital

flow, the newspaper said. "This creates a good financial environment for China's

economic growth," said Zhu Juan, director general of the international

department at the People's Bank of China. (People's Daily)

     China's economic growth is expected to surpass 6.5% in 2018, said Fan

Hengshan, deputy secretary-general of the National Development and Reform

Commission, the Shanghai Securities Journal reported Monday. This year's

economic growth, whether in terms of efficiency or structure, is better than

last year and has exceeded expectations, Fan said on Saturday during a forum in

Beijing. If this year's economic growth is more than 6.8% or 6.9%, next year's

gross domestic product growth will be no lower than 6.5%, he argued. He also

said that as China works to transform its growth engine, focusing on efficiency

and structure, its economy will improve in quality and fairness. (Shanghai

Securities Journal)

     China should allow local-government financing vehicles (LGFVs) and

state-owned enterprises controlled by local governments to default under market

forces, which could correctly judge the credit risks of local-government debt,

Ma Jun, former chief economist of the People's Bank of China, told the Shanghai

Securities Journal. Ma, now director of the Tsinghua University Finance and

Development Research Institute, stressed that the process needs to have as its

primary goal the prevention of a systemic financial crisis. The establishment of

property taxes nationwide should be accelerated as a source of income for local

governments, he argued, which would weaken the desire to increase liabilities

and sell land for more income to fund projects. Supervision by local People's

Congresses should be strengthened, with enforced debt quotas and transparency on

balance sheets. (Shanghai Securities Journal)

     The State Council has confirmed a plan for a pilot program this year to

transfer 10% of the shares of some state-owned-enterprises (SOEs) to basic

pension funds, the Economic Information Daily, a newspaper under the official

Xinhua News Agency, reported Monday. The plan, announced Saturday, is to use the

money from the shares to fund pensions for SOE workers. The transfers would not

involve listed SOEs and would not create a process to turn SOE shares into cash,

the newspaper said, citing an unidentified Ministry of Finance official. The

plan calls for increasing the pace of the transfers in 2018 and the following

years. (Economic Information Daily)

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

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

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