MNI China Daily Summary: Friday, February 28

     BEIJING (MNI) - EXCLUSIVE: China may target 2020 growth in a range between

5.5% and 6% and signal that it could tolerate inflation target above 3% as the

coronavirus outbreak adds to already strong headwinds, sources close to policy

makers told MNI. The first quarter may see growth halved to 3% from 6% in Q4,

and the epidemic is likely to remain a drag on activity into March, said a

source asking not to be named, noting that the country only needs to grow by

5.6%-5.7% this year to reach the goal of doubling GDP from 2010, thanks to

upwards revisions of previous years' growth.

     EXCLUSIVE: China could issue up to CNY1 trillion of special CGB China

Government Bonds or expand issuance of infrastructure-backed special-purpose

debt by local governments to fund increased fiscal spending to counter the

economic impact of the coronavirus outbreak, government advisors told MNI.

"However it's labelled, the government will almost certainly boost fiscal

funding to cover extra-budgetary spending on epidemic control," said Liu

Xiangdong, deputy director of economic research at the China Center for

International Economic Exchanges, adding that the authorities will be keen for

the target of doubling GDP since 2010 to be met.

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

for the ninth day, leaving liquidity unchanged, according to Wind Information.

Total liquidity in the banking system is at a reasonable and ample level, PBOC

said on its website.

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

institutions (DR007) rose to 2.3231% from Thursday's close of 2.1435%, Wind

Information showed. The overnight repo average increased to 1.6270% from 1.3218%

on Thursday.

     YUAN: The currency strengthened to 6.9896 against the dollar from

Thursday's close of 7.0161. PBOC set the dollar-yuan central parity rate lower

at 7.0066 compared with 7.0215 on Thursday.

     BONDS: The yield on 10-year China Government Bonds was last at 2.7550%,

down from Thursday's close of 2.8000, according to Wind Information.

     STOCKS: The Shanghai Composite Index tumbled 3.71% to 2,880.30, dampened by

growing fears about the global spread of the coronavirus epidemic. Hong Kong's

Hang Seng Index slipped 2.42% to 26,129.93.

     FROM THE PRESS: The issuance of local government bonds in China will rise

to a small peak after many local authorities delayed issuances due to the

Chinese New Year holiday and the epidemic in February, the Securities Daily

reported. A total of CNY135.8 billion bonds were set to be issued over four days

from Feb. 20 as more people returned to work, the daily said.

Infrastructure-backed special bonds may reach CNY3.3 trillion this year year,

compared to CNY3 trillion expected before the outbreak, the newspaper said

citing Wen Siji, an analyst at New Time Securities.

     China should speed up the transfer of shares in state-owned enterprises

(SOEs) to social security funds as the epidemic reduces fiscal revenues in 2020,

the China Securities Journal reported citing Wen Zongyu, director of the Public

Capital Research Center under the Chinese Academy of Fiscal Sciences. The

government should spend the dividends from those shares right away and establish

a national coordination mechanism to help regions experiencing economic

hardship, the newspaper said. China transferred CNY1.3 trillion shares in SOEs

to social security funds in 2019, according to the journal.

     Senior Chinese medical adviser Zhong Nanshan, appointed by the government

as the most authoritative voice on the coronavirus outbreak, said he is

confident the epidemic will be largely under control by the end of April, The

Paper reported. Still, Zhong warned that the number of cases can resurge as more

people returned to work as projected by his team's modelling, the newspaper

cited Zhong 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

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