MNI China Press Digest, Nov 26: Rate Hike, Yield Spread, CBIRC

     BEIJING (MNI) - The following lists highlights from Monday's Chinese press:

     If the U.S. Fed does raise rates a further 3 or 4 times in the year ahead,

the PBOC may not have the leeway to follow suit, China Securities Journal

reported Monday, citing Huang Yiping, an economist who's also a former member of

the central bank's monetary policy committee. Therefore, the government should

consider further measures to maximize the independence and flexibility of

monetary policy, the report said. First, the authorities should allow the yuan

to fluctuate with managed flexibly instead of sticking to a certain level.

Second, as a near-term measure, it is necessary to strengthen the management of

cross-border capital flows, the Journal said, citing Huang. (Link to the story:

https://bit.ly/2FIxrFr)

     The tightening U.S./China one-year govvie spread is not surprising, and it

is unlikely to lead to yuan depreciation nor necessarily result in large capital

outflows, the Economic Daily reported Monday, citing Ming Ming, chief fixed

income analyst at CITIC Securities and a former official in the PBOC's monetary

policy department. China's capital markets have not yet been fully opened, and

its FX derivatives market needs improving. These two factors will hinder the

narrowing yield spread from putting pressure on yuan, Ming said. China's economy

remains resilient after cutting overcapacity, destocking and the deleveraging

campaign, and can run smoothly and steadily. Therefore, markets need not worry

too much that the spread will lead to capital outflow, Ming added. (Link to the

story: https://bit.ly/2Rcijl2)

     The China Banking and Insurance Regulatory Commission(CBIRC) has given a

green light to German insurance giant Allianz SE to set up a subsidiary

operation. The new group will be China's first insurance holding company to be

wholly-owned by a foreign insurer, the Financial News reported. The CBIRC has

also given 10 further market access approvals to foreign banks and insurance

companies to set up branches or asset management firms recently, the newspaper

said. As a next step, the CBIRC said Sunday it will steadily expand the opening

up of China's financial sector, improving risk prevention and supervision

capacities.

--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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