UPDATE 1-PRESS DIGEST - China - Aug 21

(Adds further newspapers in final two paragraphs)

BEIJING/SHANGHAI, Aug 21 (Reuters) - Chinese newspapers available in Beijing and Shanghai carried the following stories on Thursday. Reuters has not checked the stories and does not vouch for their accuracy.

FINANCIAL NEWS

-- China is considering allowing small and medium-sized firms to issue short-term bills in the interbank market as a way to expand their financing channels.

-- China's Ministry of Finance has put aside 3.51 billion yuan ($512 million) in special funds for small and medium-sized firms during the fiscal year 2008, up 20.3 percent from last year.

-- China's insurance regulator urged life insurers to increase risk awareness and press ahead with structural changes despite rapid 66.7 percent growth in life insurance premiums in the first seven months due to a rapid rise in bancassurance business.

CHINA DAILY (www.chinadaily.com.cn)

-- China's National Audit Office has set up a new department to check the use of money in overseas arms of government organs and state-owned enterprises.

-- U.S. fast-food chain KFC, operated by Yum Brands Inc (YUM.N), raised its prices in China for the second time this year because of inflation. The increase, starting from Monday, ranged from 0.5 yuan to 2.5 yuan for different food items.

PEOPLE'S DAILY

-- China will continue to face a tight supply of coal, electricity and oil in the next few months, the National Development and Reform Commission said.

CHINA SECURITIES JOURNAL

-- Overseas firms approved to trade on China's stock market under the Qualified Foreign Institutional Investors (QFII) scheme increased their holdings by about 10 percent in the second quarter of this year despite a market slump, a summary of nearly 900 listed companies' interim results showed.

-- Analysts said the Chinese stock market's jump of more than 7 percent on Wednesday was only a technical rebound sparked by vague rumours of market-friendly steps by the government. The market has little potential for a sharp rise in the near term, they said.

-- Some Chinese non-financial firms in Beijing and Shanghai are beginning to conduct individual foreign exchange business after new rules promulgated this week allowed them to do such business on a trial basis. Previously, foreign exchange business was confined to financial institutions in China.

SHANGHAI SECURITIES NEWS