MNI China Press Digest: Tuesday, Nov. 21

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

Tuesday, Nov. 21

     China's macro-prudential policy will establish credit and property prices

as anchors to stabilize the financial cycle, the Financial News, a journal of

the People's Bank of China, reported Tuesday. In today's financial situation, it

is a challenge for the PBOC to achieve its goal of stability in prices and the

financial sector. Analysts say a "two pillars" framework -- monetary policy and

macro-prudential policy -- will help guarantee proper liquidity conditions,

stabilize prices and output, curb price bubbles and prevent systemic financial

risks. Regulators need to coordinate the two pillars to accommodate economic and

financial cycles, the newspaper argued.(Financial News)

     Banks' wealth-management products would be overhauled to have longer

durations, higher thresholds of clients and lower leverage under draft

guidelines issued by top regulators, the 21st Century Business Herald reported

Tuesday. The guidelines mainly focus on implicit guarantees of payment,

leverage, channel transactions, multiple layers and capital pools. Mainstream

wealth-management products will be divided into two categories: fixed-asset

products and mixed mutual funds. Wealth-management products for high-level

clients will be allowed to invest in debt-to-equity swaps. Lower leverage will

benefit the long-term growth of the sector, the newspaper argued. Chinese banks

have issued wealth-management products totaling CNY30 trillion.  (21st Century

Business Herald)

     Mortgage rates for first-time home buyers in Beijing have risen 10% above

the benchmark interest rate as government controls on the property market have

continued to bite and credit from banks has shrunk, the Securities Daily

reported Tuesday. Some banks, with their credit quotas limited at the end of the

year, have even raised the rates by 40%. Even so, the approval procedure for

mortgages has been faster due to sluggish home sales in recent months, the

report said, citing unidentified people familiar with the information. In

October, the nationwide average mortgage rate was 5.3%, which was 8.2% above the

benchmark rate. Although the rise has slowed, the upward momentum remains

obvious, the newspaper said. (Securities Daily)

     In a measure of its economic efficiency, China can produce the same level

of output with less capital than the previous year for the first time in at

least a decade, Caixin Magazine reported on its website Tuesday. But as China is

still being pulled by competing needs -- economic growth, financial deleveraging

and social stability -- efficiency might again end up on the back burner, said

Michael Taylor, chief credit officer of Moody's Investors Service. Among the

competing needs, reform and rebalancing are less important, with the emphasis on

growth and stability, Taylor said. (Caixin Magazine)

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

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

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