MNI China Daily Summary: Friday, April 17

     BEIJING (MNI) - EXCLUSIVE: The People's Bank of China (PBOC) will guide the

benchmark loan prime rate lower next Monday, as the economy's recovery from

lockdown is slowed by plunging export demand in the second quarter, sources and

advisors told MNI, with one saying GDP may have contracted by 6% or more from

Jan-March and may expand by as little as about 1% in all 2020.

     POLICY: There was a marked improvement in China's March major economic

indicators with a projected continuous recovery seen as the country emerges from

the coronavirus outbreak, the National Bureau of Statistics (NBS) said today,

whilst downplaying a 6.8% YoY contraction in Q1 GDP. "The economic performance

in the second quarter will be significantly better than that in the first

quarter, with the accelerated resumption of work and production as well as the

introduction of more vigorous policies," spokesman Mao Shengyong said at a

briefing.

     DATA: China's GDP slipped -6.8% y/y in Q1, the first drop on record, as the

coronavirus pandemic disrupted the world's second-largest economy, according to

data released by the NBS. Industrial production slipped -1.1%y/y in March,

largely recovering from the -13.5% y/y decline of Jan-Feb and outshining the

projected -7.0% fall. Retail sales fell -15.8% y/y in March, picking up

moderately from the -20.5% slump in the first two months but underperforming the

-10.0% forecast. Fixed-asset Investment tumbled -16.1% y/y in Q1, improving from

the -24.5% plunge in Jan-Feb but weaker than the -15.0% projection.

     LIQUIDITY: The PBOC skipped open market operations for the second day,

resulting in a net drain of CNY200 billion given the same amount of one-year

medium-term lending facility matured today, according to Wind Information.

Liquidity in the banking system is reasonable and ample, the PBOC said on its

website.

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

institutions (DR007) increased to 1.4616% from Thursday's close 1.2300%, Wind

Information showed. The overnight repo average rose to 0.7125% from 0.6876% on

Thursday.

     YUAN: The currency weakened to 7.0764 against the dollar from Thursday's

close of 7.0745. PBOC set the dollar-yuan central parity rate higher at 7.0718,

compared with 7.0714 set on Thursday.

     BONDS: The yield on 10-year China Government Bonds was last at 2.5575%, up

from Thursday's close of 2.5075, according to Wind Information.

     STOCKS: The Shanghai Composite Index gained 0.66% to 2,838.49. Hong Kong's

Hang Seng Index rallied 1.56% to 24,380.00.

     FROM THE PRESS: China is expected to issue as much as CNY1.5 trillion in

Special Chinese Government Bonds, the Securities Times reported citing Zhang

Yiqun, deputy director with the Society of Public Finance of China. The issuance

of CNY1 trillion is appropriate given the government's debt-paying ability and

the money raised will be invested in the public health sector and renovating old

residential compounds, Zhang was cited as saying.

     China aims to renovate 39,000 urban residential areas this year, built

before the year 2000 and covering seven million households, the Economic

Information Daily reported citing Vice Minister of Housing and Urban-Rural

Development Huang Yan. This is more than double last year's program, which

covered 3.52 million households, said Huang. The large scale of the work

required a joint funding effort, comprising central government subsidies, fiscal

spending and special bond issuance by local governments, as well as private

investment, Huang was cited as saying.

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

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

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