MNI: Financial Risks, Local Debt: China Press Digest - Jan. 30

     BEIJING (MNI) - The following lists key stories that appeared in Chinese

press on Tuesday.

     China faces a significant risk of a systemic financial crisis because of

the financial industry's complex structure and irregularities, Lou Jiwei, former

finance minister and now chairman of National Council for Social Security Fund,

said in statement on the council's website. 

 - China's financial system has been severely distorted by numerous derivatives,

such as P2P, payday loans and fund pools, which led to rising cost of capital

and limited growth of the real economy: Lou 

 - Many risks are hidden in China's financial channels and difficult to track:

Lou 

 - China must control these risks to prevent crisis: Lou

***COMMENT: Lou is yet another high-profile official to lend his voice to the

widening campaign tackling the widespread and little-understood financial

dealings. China is taking a calculated risk as coercive measures will likely

limit growth.

     Many Chinese regional governments are ratcheting up campaigns to tackle

their mounting debt, the China securities Journal reported citing meetings of

local lawmakers.

 - Regulatory pressure on local government debt will continue, while new and

stronger measures will be unveiled: Journal;

 - Some regions imposed lifelong accountability on officials for borrowing:

Journal;

 - Strict management of local debts will be an important task in laying the

foundations for preventing and resolving major risks: Journal. 

***COMMENT: As President Xi Jinping's top economic advisor Liu He mentioned in

Davos last week, curbing financial risks will be a priority task for the gov't

this year. Keeping a lid on local gov't debt burdens means central government

will tolerate slower growth this year.

     The yuan may be stable against the dollar in the immediate term while

maintaining a longer-term strength, the China Securities Journal said in a

report citing market participants.

 - While the dollar index slowed its decline, the market expects weak dollar in

the long term;

 - A possible March rate hike by the U.S. Federal Reserve and this week's U.S.

economic data releases have been factored in by the market, leaving little

support for the dollar, Journal said.

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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

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