MNI China Daily Summary: Friday, June 28

     MNI EXCLUSIVE: The yuan may receive a short-term boost if the meeting

between the Chinese and U.S. leaders turn out positive this weekend, pulling

away from 7 to the dollar, but no sharp appreciation is likely, given a weak

economy which might require further cuts in banks' reserve requirement ratios

and even interest rates, government advisors told MNI.

     MNI EXCLUSIVE: China and the U.S. could reach a deal including cancelling

all tariffs imposed by Washington since July 2018 if Presidents Xi Jinping and

Donald Trump agree to restart negotiations this weekend, Chinese government

advisors told MNI. 

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

(OMOs) for a fifth day this week, leaving liquidity unchanged as no reverse

repos matured, according to Wind Information. Total liquidity in the banking

system is at a reasonable and ample level, the PBOC said in a statement on its

website. 

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

institutions (DR007) rose to 2.5636% from Thursday's close of 2.5590%, Wind

Information showed. The overnight repo average increased to 1.3864% from

Thursday's 0.9503%.

     YUAN: The yuan strengthened to 6.8683 from Thursday's close of 6.8768. The

PBOC set the dollar-yuan central parity rate at 6.8747 from Thursday's 6.8778.

     BONDS: The yield on the 10-year China Government Bond was last at 3.2250%,

lower from Thursday's close 3.2550, according to Wind Information.

     STOCKS: The benchmark Shanghai Composite Index fell 0.60% to 2,978.88. Hong

Kong's Hang Seng Index fell 0.28% to 28,542.62. 

     FROM THE PRESS: China's monetary policy should serve the goal of the

country's economic development to the highest level, the Economic Information

Daily said in a front page commentary on Friday. Paraphrasing the PBOC's Q2

monetary policy committee meeting held this week, the newspaper said the central

bank will deepen reforms around interest rate marketization and may finetune the

policy in response to external uncertainties and slowing domestic demand.

     President Xi and Japan's Prime Minister Shinzo Abe met in in Osaka and

agreed to deepen co-operation in technology innovation, intellectual property

protection, economic investment and financing, according to a Friday report in

the official People's Daily newspaper. The two sides also agreed to push forth

the negotiation of a China-Japan-ROK free trade agreement and completing it this

year, the daily said.

     China has cut fees and taxes by CNY893 billion in the first five months of

2019, about 44% of the government target of CNY2 trillion, the Securities Daily

reported citing Zhang Yiqun, a deputy director of the China Budget and Budget

Performance Committee. China will also continue to reform state-owned

enterprises, the daily said citing Zhang.

     China's freight volume is up 6.0% y/y for the first five months of 2019,

the People's Daily reported. Other major indicators also remained strong and the

transportation economy was operating smoothly, the daily said citing Wu

Chungeng, spokesperson of the Ministry of Transport and director of the Policy

Research Office.

     China's Finance Minister Liu Kun warned local authorities against illegal

debt issuance in an environment where cuts in taxes and fees have had a greater

impact on fiscal revenues, the China Business News reported. It is  necessary to

strengthen the management of local government bond issuance and rationally

arrange the rhythm of issuance, Liu told a conference where he delivered the

2018 Final Accounts Report, according to the newspaper.

--MNI Beijing Bureau; tel: +86 (10) 8532-5998; email: flora.guo@marketnews.com

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

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