MNI China Press Digest: Tuesday, Nov. 28

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

Tuesday, Nov. 28.

     The yuan will continue its two-way fluctuation and cross-border capital

flows will tend to be balanced in the period ahead, the Financial News, a

journal run by the People's Bank of China, reported in its front page Tuesday.

As China continues to open up its financial markets, economic growth remains

solid and market expectations for one-way volatility of the yuan fade, capital

flows will establish a stable momentum, the report argued. From the end of May

to early September this year, the yuan rose over 4,000 pips, which greatly

increased the credibility of China's yuan exchange rate policy but also created

challenges for export companies, the report noted. These companies should pay

attention to the management of their exchange rate risk, the report suggested.

(Financial News)

     The tight liquidity situation in the interbank market will ease this month

as the People's Bank of China continues its injections via open market

operations at a flexible pace and because fiscal spending is expected to

increase, the Financial News, a journal run by the central bank, reported

Tuesday. The volatility of liquidity increased in the third quarter due to

seasonal and temporary reasons, but the PBOC has enhanced its communications

with the market and strengthened the fine tuning of its policy. As a result, it

has maintained liquidity at a neutral and proper level, the report argued. The

central bank will continue to conduct 7-day, 14-day, 28-day and 63-day reverse

repo operations to guarantee the stability of the interbank market, the report

noted. (Financial News)

     Property market controls next year will focus on increasing housing supply,

the Economic Information Daily reported Tuesday. According to a meeting held in

Wuhan by the main regulators, including the People's Bank of China, smaller Tier

3 and Tier 4 cities in the western and central regions of the country will see

stricter property market regulations since the markets in larger Tier 1 and Tier

2 cities have gradually cooled down, the report said. The authorities will

tighten regulations given households' leverage ratio is surging, the central

government's tolerance for an economic slowdown is increasing, and a long-term

mechanism for the property market is needed, the report noted. (Economic

Information Daily)

     The China Bank Regulatory Commission will tighten regulations on city

commercial banks to prevent liquidity and credit risks, the 21st Century

Business Herald reported Tuesday, citing Cao Yu, vice-chairmen of the CBRC.

These regional banks are struggling to obtain deposits, particularly when

regulators are cracking down on interbank transactions as part of their

deleveraging campaign, the report said. According to the CBRC, assets of city

commercial banks increased 24.5% year-on-year to CNY28.24 trillion at the end of

2016, an asset growth rate 8.7 percentage points higher than the average of the

banking sectors, while their liabilities rose 25% to CNY26.4 trillion, the

report said. (21st Century Business Herald)

--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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