MNI China Daily Summary: Friday, July 13

     TOP NEWS: Comments by the U.S. that China uses unfair trade practices

distorts facts and has no ground, the Ministry of Commerce said in an

extensively long statement, refuting arguments in the USTR's July 10 statement.

The escalation of trade conflicts is completely the responsibility of the U.S.

as its flip-flops during trade talks reversed a consensus reached by both sides.

     TOP NEWS: China may accept slower growth and selectively boost liquidity to

help lessen the impact of the trade war with the U.S., Zong Liang, vice general

manager of the Strategic Department at the Bank of China (BOC), told MNI in an

interview. Policymakers may allow "a modest drop of the GDP target" if the

conflict escalates to the extreme, Zong said.

     DATA: China's General Administration of Customs announced trade statistics

for the first half of 2018. June exports rose by 11.3% y/y to USD216.74 billion,

in line with MNI's survey for 10.0% y/y growth. Imports in June reported a

slower increase of 14.1% y/y to USD216.74 billion. Despite the rise, the data

failed to meet the 21.0% y/y expectations.

     DATA: Foreign direct investment (FDI) into China rose 0.3% y/y in June to

CNY100.7 billion, down from the 7.6% growth last month, the Ministry of Commerce

said. In U.S. dollar terms, it grew 5.8% y/y to $15.66 billion. In Jan-June, FDI

rose 1.1% y/y to CNY446.29 billion, or up 4.1% to $68.32 billion.

     LIQUIDITY: The People's Bank of China (PBOC)injected CNY188.5 billion via

medium-term lending facilities (MLF)loans on Friday, with the rate unchanged at

3.3%. A total of CNY20 billion reverse repos and CNY188.5 billion MLF matured

today, according to a statement on the PBOC's website. The PBOC has drained a

net of CNY90 billion via its reverse repos and MLF loans this week. CFETS-ICAP's

money-market sentiment index closed at 37 on Thursday, down from 38 on

Wednesday.

     MONEY MARKET RATES: Benchmark 7-day deposit repo average rose to 2.6501% on

Friday from 2.6418% on Thursday; Overnight average decreased to 2.4468% from

2.4580% on Thursday: Wind Information.

     YUAN: The yuan rose to 6.6582 against the U.S. dollar on Friday from

Thursday's 6.6679 closing, despite of today's weaker fixing. The PBOC set the

yuan central parity rate at 6.6727, weaker than Thursday's 6.6726.

     BONDS: The yield on benchmark 10-year China Government Bond was last at

3.4850%, down from the previous close of 3.5100%, according to Wind Information.

     STOCKS: Chinese stocks are coming under pressure even as the yuan sees some

slight strength as the two markets continue to show signs of decoupling after

moving in lockstep over the past month. Shares in Shanghai slightly declined

after yesterday's big gain. Shanghai Composite Index closed 0.23% lower at

2830.59. Hong Kong's Hang Seng Index rose 0.23% to 28545.49. 

     FROM THE PRESS: Shantytown renovation programs need to adjust measures to

local conditions. Cities with a large inventory can still give subsidies to

residents for resettlement, Xinhua News Agency said, citing a manager at the

Ministry of Housing and Urban-Rural Development (MoHURD). Local governments

should further define the range and standard of shantytown renovation, the

manager said. The shantytown areas have renovated 3630 thousand houses in the

first half of the year, 62.5% of the goal for the whole year, the newspaper

said. The manager urges local governments to start new real estate projects as

soon as possible and strengthen the construction of supporting infrastructures

in shantytown areas.

     Central state-owned enterprises made CNY201.88 billion yuan in profit in

June, up 26.4% year over year, creating an all-time high in a single month,

Financial News reported, citing Peng Huagang, deputy secretary of State-owned

Assets Supervision and Administration Commission (SASAC). The SASAC has kept a

close eye on highly indebted enterprises and the average asset-liability ratio

declined 0.5 percentage point year over year in June, Peng said. The SCSAC has

converted over CNY200 billion debt into equity, Peng added.

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

--MNI Singapore Bureau; +65 8233 2326; email: Asia-Editor@marketnews.com

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