MNI China Press Digest: Thursday, Nov. 30

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

Thursday, Nov. 30.

     The government's deleveraging campaign has made progress and leverage

ratios continue to fall in the financial and non-financial sectors, but reducing

the debt of state-owned enterprises (SOEs) is still the top priority of the

deleveraging effort, the Financial News, a journal run by the People's Bank of

China, reported Thursday on its front page. Deleveraging of big SOEs has

increased the pressure to deal with financial institutions' non-performing loans

and could trigger debt payment risks, the report warned, citing analysts.

Debt-for-equity swaps should be emphasized, the report argued, noting that as of

the end of September, 77 companies, mainly big SOEs, had signed a total of

CNY1.3 trillion in debt-for-equity swaps agreements, the report said. (Financial

News)

     The establishment of new private-sector banks in China has almost stalled

because regulators have raised the bar for approval and the capacity of new

institutions to attract deposits is weak, the 21st Century Business Herald

reported Thursday. Since 2014, 17 private banks have been approved, but they

rely heavily on interbank transactions because their deposit products have

attracted few clients, the report said. Given the on-going government financial

deleveraging campaign, this reliance is not sustainable. Authorities have raised

the registered capital requirement to CNY2 billion and the frequent resignation

of high-ranking executives at the new institutions has also been a heavy blow,

the report noted. (21st Century Business Herald)

     Other countries should be cautious about the spill-over effects from "Trump

Economics," though a good performance by the U.S economy could be a strong

engine for global growth, the Economic Information Daily said in a front page

commentary Thursday. If the U.S makes significant tax cuts, other economies

should consider following suit to retain their competitiveness, the commentary

argued. The combination of U.S. monetary policy normalization and a large tax

reduction would push up U.S. public debt, forcing many emerging economies to

worry about the stability of their currencies and the security of their foreign

reserves, the commentary warned. (Economic Information Daily)

     Infrastructure investment is expected to slow further due to the

deleveraging and risk prevention campaign, so improving consumption will be the

focus of efforts to stabilize growth, the China Securities Journal reported

Thursday. The infrastructure investment growth rate will drop to 14% next year,

in particular because regulators are tightening controls on public-private

partnership projects initiated by local governments, the report noted. But if

investment in the property and manufacturing sectors plunges, the government is

likely to boost infrastructure investment via fiscal spending to offset the

downward pressure on the economy, the report argued. (China Securities Journal)

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

--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

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