MNI China Daily Summary: Friday, February 15

     TOP NEWS: President Xi Jinping said China is willing to resolve the

economic and trade differences and frictions with the U.S. through cooperation

in ways both sides can accept, according to a statement on the mobile App of

China Central Television. Xi spoke while meeting U.S. Trade Representative

Robert Lighthizer and Treasury Secretary Steven Mnuchin in Beijing on Friday,

CCTV said.

     TRADE: China has requested an extension of trade talks with the U.S. beyond

a March 1 deadline, with the intention of finalizing a deal later at a meeting

between presidents Xi Jinping and Donald Trump, a source briefed by both

governments on progress of negotiations told MNI Thursday. The source, who

requested anonymity, claimed not have heard about a 60-day extension which

Bloomberg reported to have been proposed by the U.S. side. Officials have not

yet discussed specific language for a draft agreement, the source told MNI. But

both sides are moving towards making concessions, with the U.S. government

realizing it will be unable to obtain all it wants in the current 90-day

negotiation period while China has shown willingness to further accelerate the

process of opening up its markets and to increase purchases of U.S. goods and

services.

     DATA: New loans totaled CNY3.23 trillion in January, outpacing the CNY3.0

trillion projected by an MNI survey and the CNY1.08 trillion recorded in

December, hitting a historical high, data released by the People's Bank of China

(PBOC) today showed. Aggregate financing to the economy also surged to a record

high of CNY4.64 trillion from CNY1.59 trillion in December, beating projected

CNY3.3 trillion. M2 grew by 8.4% y/y in January, higher than forecast 8.2%

forecast and 8.1% in December.

     DATA: Producers price index (PPI) rose just 0.1% in January over a year

ago, decelerating from the 0.9% gain in December, according to data released by

the National Bureau of Statistics (NBS). It was the lowest level since September

2016 and below 0.3% projected by economists surveyed by MNI. Consumer price

index (CPI) rose 1.7% y/y vs forecast 1.8%. It was the slowest pace since

November 2017 and down from 1.9% in December. 

     LIQUIDITY: The PBOC skipped open market operations for a fifth day,

resulting in a net drain of CNY90 billion as that amount of reverse repos

matured, according to Wind Information. The PBOC said the total liquidity of the

banking system is currently at a reasonable and ample level, able to offset cash

withdrawals, maturing reverse repos and financial institutions' payment of

reserve requirement.

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

institutions (DR007) increased to 2.2174% from Thursday's close of 2.1883, Wind

Information showed. The overnight repo average decreased to 1.7096% from

Thursday's 1.7098%. 

     YUAN: The yuan depreciated against the dollar to 6.7802 from Thursday's

close of 6.7701. The PBOC set the dollar-yuan central parity rate at 6.7623 on

Friday, stronger than the 6.7744 set on Thursday.

     BONDS: The yield on 10-year China Government Bond was last at 3.085% from

the close of 3.10% on Thursday, according to brokers.

     STOCKS: The benchmark Shanghai Composite Index closed 1.37% lower at

2,682.39. Hong Kong's Hang Seng Index fell 1.87% to 27,900.84.

     FROM THE PRESS: China's financial services industry must fully support

private enterprises boosting their direct financing, the State Council said late

Thursday. The authorities must accelerate the progress of IPOs and refinancing

reviews for private companies, support non-listed private firms to issue private

convertible bonds, and encourage financial institutions to increase investment

in private corporate bonds and expand credit supply to private and small firms,

the guidance said.

     The Chinese economy may achieve a soft landing within three years, China

Securities Journal reported today, citing Hua Changchun, chief economist at

Guotai Junan Securities. Improved productivity driven by supply-side reform, the

rise of high-end manufacturing industry, the growing demand of big data and

artificial intelligence, as well as the formation of city clusters will support

the transformation and long-term development of the Chinese economy, the paper

said citing Hua.

     China's luxury housing market is cooling, as the transaction of luxury

homes in tier-one cities totaled just 6,269 units last year, less than 30% of

that in 2016, 21st Century Business Herald reported, citing data released by

China Real Estate Information Corp., a Nasdaq-listed real estate research firm.

Investors have a lower appetite with the downturn and tighter credit curbing

demand, the newspaper said.

--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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