MNI Yuan's Gain, Curb Financial Risks: China Press Digest

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

Wednesday, January 17:  

     The Chinese yuan may further appreciate, but its current gain doesn't mean

China's objective of keeping a stable exchange rate is changing, China

Securities Journal said in a commentary Wednesday. 

- Yuan's gain since mid-Dec is due to the weakening of the U.S. dollar: paper 

- Market expectation and investors' behaviors may accentuate the short-term

swing: newspaper 

- Difficult for yuan to repeat last year's 6% gain; outlook is mixed: newspaper 

***TAKEAWAY: The commentary by the official security newspaper suggests the

central bank will seek to maintain stability of the yuan and guide market

expectation to minimize high volatilities.

China regards the yuan's gain against the U.S. dollar secondary to its stability

vs a basket of currencies, PBOC's Financial News newspaper reported citing

unidentified sources.

- PBOC needs not to set limits for the minimum or maximum of the yuan exchange

rate against the U.S. dollar: newspaper citied sources

- Euro's strength contributed to the weakening of the dollar: Financial News 

- Yuan's stable rise helps its internationalization, including more use in

global trade and investment, appeal of yuan-denominated bonds, greater yuan

allocation in other foreign nation's FX reserves: newspaper cited sources.

*** TAKEAWAY: Financial News seems positive on yuan's outlook. PBOC may see a

stronger yuan could help China's desire to widen the global use of the yuan.

     China banking regulators are targeting this year large financial entities

created illegally with complicated structures and irregular investment

activities, China Banking Regulatory Commission Chairman Guo Shuqing was citied

as saying by Wednesday's People's Daily. 

- Stability of China's financial sector threatened by factors including

non-performing bad assets, shadowy transactions and illicit activities: Guo 

- Regulators' key tasks are to strengthen risk controls, continue with

deleveraging programs targeting corporate and household debt, curb property

bubbles, and tackle the local government debt problem: Guo 

***TAKEAWAY: Regulators still see great risks in the banking sector and

financial activities will remain limited by close scrutiny.

     China's housing authorities reiterated that it would "resolutely" enforce

curbs on the property sector, and that media reports that some cities loosened

controls were misinterpretation of government measures: Ministry of Housing and

Urban-Rural Development website. 

- Last week, some Chinese newspapers reported cities including Lanzhou had

loosened restrictions on home purchases. 

***TAKEAWAY: While China's central government keeps the tight lid on the

property market, regional authorities concerned with slowing growth will seek to

bend rules. See MNI story: China's Property Market Defies Doom Predictions

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

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

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