MNI China Daily Summary: Friday, April 12

     TRADE: China's exports rebounded, rising 14.2% y/y after falling 20.7% in

February, the biggest y/y gain in the last five months. Imports fell 7.6% y/y,

compared with 5.2% y/y decrease in February. Larger exports and smaller imports

helped expand trade surplus to USD32.61 billion from USD4.12 billion in

February.

     DATA: China's M2 in March rose 8.6% y/y, the quickest pace in more than a

year, suggesting a recovery that may prompt the central bank to hold off easing

measures, such as a speculated cut in required reserve ratios for banks. New

loans totaled CNY1.69 trillion, more than CNY1.265 trillion projected by MNI.

Aggregate financing to the economy rose CNY2.86 trillion, more than four times

February's CNY703.0 billion, beating a projection of CNY1.9 trillion.

     POLICY: Job creation in China could soon be pressured by ongoing structural

reform efforts, with the slowing economy and trade uncertainty adding to the

problem, a former State Council official told MNI. Song Xiaowu, a former

secretary at the Office for Revitalizing Northeast China under the State

Council, warned that many countries have previously seen unemployment rise

during periods of restructuring and China needed to be aware of the problem. The

ongoing trade dispute between China and the U.S. would weigh on employment

ahead, as higher tariffs would increase costs for domestic companies and push

overseas investors to look elsewhere for a cheaper labour destination, said

Song, who is also a member of Chinese Economists 50 Forum.

     POLICY: The government should treat state-owned and private enterprises

equally in granting access, business operations, government procurement bidding,

as fair competition is the key supporting the healthy development of SMEs, Wang

Jiangping, a vice minister of Industry and Information Technology, told

reporters today. 

     LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations

for the 17th straight trading day, leaving liquidity unchanged as no reverse

repos matured, according to Wind Information. Total liquidity in the banking

system remains at a reasonable and ample level, according to the PBOC.

     RATES: The 7-day weighted average interbank repo rate for depository

institutions (DR007) rose to 2.7000% from Thursday's close of 2.6591%, Wind

Information showed. The overnight repo average increased to 2.6500% from

Thursday's 2.7191%. 

     YUAN: The yuan strengthen to 6.7145 from Thursday's close of 6.7167. The

PBOC set the dollar-yuan central parity rate at 6.7220 today, compared with

6.7088 on Thursday.

     BONDS: The yield on 10-year China Government Bond was last at 3.3300%, up 3

bps from Thursday's close%, according to brokers.

     STOCKS: The benchmark Shanghai Composite Index fell 0.04% to 3,188.63. Hong

Kong's Hang Seng Index increased 0.24% to 29,909.76.

     FROM THE PRESS: The PBOC may consider lowering the reserve requirement

ratio to fill the liquidity gap, the Securities Daily said citing Xu Hongcai,

the deputy chief economist at government-backed think tank the China Center for

International Economic Exchanges. Growth of M2 is still lower than that of

nominal GDP, while M1 growth has been lingering at a low level of close to 1%,

suggesting a liquidity gap and requires a RRR cut, Xu said according to the

daily.

     The Chinese economy is expected to stabilize in Q2 as stimulus policies

start to take effect, the Economic Information Daily reported citing Sheng

Songcheng, a former director of the Survey and Statistics Department of the

PBOC. There won't likely be a dramatic deceleration in investment, retail sales

and exports this year, trade tensions and financial risks may ease, and private

enterprises would continue to gain from policy support and structural reform,

the newspaper said citing Sheng.

     Local governments should try to prevent fluctuation of home prices and

crack down on housing speculators, while relaxing the "hukou" household

registration system, according to a commentary in the People's Daily today.

China aims to move rural population to cities by offering them urban resident

status, a policy that may boost the economy but also increase population density

and fan housing prices, the newspaper said.

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

[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]