MNI China Press Digest June 13: Special Bonds, Banks, ECB

Highlights from Chinese press reports on Friday:

• Hunan province will issue CNY20 billion of local government special bonds to resolve overdue corporate accounts, a nationwide first, Yicai.com reported. The initiative, first signalled during this year’s Two Sessions in March, broadens the use of such funds beyond traditional infrastructure projects. Analysts expect over 10% of this year’s CNY4.4 trillion special bonds will go towards resolving overdue accounts owed to enterprises, the newspaper said.
• Several city commercial banks are replenishing capital, mainly through increasing local SOE shareholding or private placement, 21st Century Business Herald reported. Bank of Qingdao said one shareholder planned raising its holdings through a subsidiary, while Hong Kong-listed Luzhou Bank expected at least HKD1.85 billion through issuing one billion new H-shares via private placement, the newspaper said. Small and medium-sized banks face capital replenishment pressure amid narrowing interest spreads and asset quality, the Herald added.
• China is willing to strengthen cooperation with the European Central Bank on reforming the international monetary system and will expand opening up, Premier Li Qiang told ECB President Christine Lagarde at a meeting in Beijing. The ECB welcomes establishing a meeting mechanism of central bank governors including China and remains committed to strengthening coordination with Chinese financial institutions and jointly addressing global challenges, Lagarde said. (Source: Xinhua)