MNI China Daily Summary: Friday, February 14

     BEIJING (MNI) - POLICY: China's bank regulator has asked banks to ease

requirements on non-performing loans (NPLs) and reduce the lending rate charged

to small businesses by more than 0.5 percentage point this year, said Li

Junfeng, director of the Inclusive Finance Department of the China Banking and

Insurance Regulatory Commission. Loans with modest overdue payments because of

the coronavirus outbreak won't count as NPLs or affect small businesses' credit

ratings, Li said at a press briefing on Friday. NPL forgiveness can be extended

in areas and industries severely affected by the epidemic, Li added.

     POLICY: Chinese companies hit by the coronavirus are finding it difficult

to get financing support, despite a raft of government policies to boost lending

to firms, MNI has been told by banks, firms and industry analysts. "Small and

medium companies are not producing so they have nothing to pledge to the banks

to get loans," an investment associate with a government-affiliated fund said.

"The current policies will mostly benefit the state-owned enterprises that have

more assets to pledge."

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

leaving liquidity unchanged, according to Wind Information. Total liquidity in

the banking system is relatively high, PBOC said. The central bank has drained a

net of CNY280 billion this week.

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

institutions (DR007) fell to 1.9826% from Thursday's close of 2.1125%, Wind

Information showed. The overnight repo average decreased to 1.2237% from 1.4219%

on Thursday.

     YUAN: The currency strengthened to 6.9795 against the dollar from 6.9805 on

Thursday. PBOC set the dollar-yuan central parity rate higher at 6.9843,

compared with 6.9785 on Thursday.

     BONDS: The yield on 10-year China Government Bonds was last at 2.8900%, up

from Thursday's 2.8550, according to Wind Information.

     STOCKS: The Shanghai Composite Index edged up 0.38% to 2,917.01. Hong

Kong's Hang Seng Index gained 0.31% to 27,815.60.

     FROM THE PRESS: The Chinese government should increase the deficit-to-GDP

ratio and sell Special China Government Bonds to support the increased spending

needed to alleviate the impact of the coronavirus epidemic, the China Securities

Journal said in a front-page commentary. Policy banks in China should also issue

financial bonds as quasi-fiscal tools for raising money, the newspaper said.

     China will prioritize employment and strengthen the monitoring of the job

markets, according to a statement on Gov.cn citing Vice Premier Hu Chunhua.

China will focus on addressing the employment of college graduates and migrant

workers, and strive to complete the annual employment target, said Hu.

     China could approve more than CNY3 trillion new local government special

purpose bonds in 2020, higher than CNY2.15 trillion approved last year, the

Securities Times reported citing Zhu Jianfang, chief economist with Citic

Securities. More of the new bonds will be used on infrastructure projects to

offset the impact of the epidemic, the newspaper cited Zhu 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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