MNI China Press Digest: Wednesday, Dec. 20

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

Wednesday, Dec. 20:

     The National Development and Reform Commission has launched a nationwide

carbon trading system to guide companies on upgrading to meet China's goal of

achieving a greener and higher-quality economy, the commission announced Tuesday

on its website and blog. The NDRC emphasized the importance of using the trading

system to control carbon dioxide emissions and said the program would begin with

the power generation sector. The 21st Century Business Herald reported that

China's system could eventually grow larger than any other carbon trading market

in the world.

     China needs to expand the scope of taxation for local governments in order

to establish a stable and sustainable process, Finance Minister Xiao Jie wrote

in an article Wednesday in the official People's Daily. In his analysis of how

China should reform its fiscal system under the guidance of the 19th Communist

Party Congress, Xiao said that the country would continue to make changes to its

taxation process for property, personal income and local governments, and that

steady progress had been made on creating related laws. He stressed that the

rights and responsibilities of the central government and local governments in

their fiscal relationship should be clear and balanced. (People's Daily)

     Several Chinese banks have raised their interest rates to attract more

deposits at the end of the year, including two that have lifted rates to more

than 5%, the 21st Century Business Herald reported Wednesday. One reason is that

money market interest rates have gone up. Also, banks are competing more with

one another, and they need to store more cash for the customary surge in lending

at the beginning of the new year. Another factor is that banks are losing

deposits to upstart financial technology companies: the growth rate for deposits

at banks has dropped to an annualized 2% this year, on average, from 7.8% in

2016. Bank executives at a forum in Suzhou said they now pay more attention to

deposits because of the government's deleveraging campaign. (21st Century

Business Herald)

     A total of 15 bonds, worth nearly CNY15 billion, issued by Chinese

companies have defaulted since the start of November, the 21st Century Business

Herald reported Wednesday. The increasing frequency of bond defaults has led to

widespread delays or cancellations of issuance, affecting 760 bonds worth more

than CNY700 billion. One of the most recent cases was that of China City

Construction Corporation Limited, which announced Monday that its tight

financial situation had led it to default on CNY1 billion in bonds. China's

supply-side structural overhauls and its environmental protection campaign,

which can weigh on industrial production, have eaten into companies' profit and

made it difficult for them to manage their bond payments, analysts said. Another

reason given by the analysts is that bond market adjustments and new refinancing

rules in the stock market have made it hard for companies to roll over their

debt. (21st Century Business Herald)

--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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