MNI China Daily Summary: Friday, March 20

     BEIJING (MNI) - EXCLUSIVE: Chinese authorities could bring forward

construction projects in a bid to boost growth in infrastructure investment this

year to about 10% to offset the impact of coronavirus and achieve the

government's aim of doubling GDP from 2010 levels, policy advisors told MNI, but

doubts linger over whether it is possible to ramp up high-tech spending fast

enough to meet the goal.

     LPR: The People's Bank of China (PBOC) unexpectedly kept its one-year Loan

Prime Rate (LPR) unchanged at 4.05% with the five-year LPR steady at 4.75%

today, according to a statement on its website. The LPR, a new reference rate

for bank loans, is anchored to the one-year MLF, a rate that is viewed as being

closer to market rates for credit. Designated banks will update their LPR

quotations based on their borrowing costs on the 20th of each month after the

PBOC reformed the LPR mechanism last August. On Feb. 20, PBOC lowered its

one-year LPR by 10 bps while also cutting the five-year LPR by 5 bps.

     POLICY: The PBOC will cut reserve ratios further and increase liquidity

injections to stabilize the economy when necessary, Ma Jun, a member of the

central bank's monetary policy committee, told Shanghai Securities News. There

is still a relatively a lot of room for PBOC to cut RRR at both full and

targeted paces and the central bank will also strengthen its open market

operations if necessary, Ma said. The comments came after the central bank

unexpectedly left the LPR unchanged for this month.

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

leaving liquidity unchanged, according to Wind Information. Liquidity in the

banking system is reasonable and ample, PBOC said on its website.

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

institutions (DR007) decreased to 1.5660% from Thursday's close 1.6290%, Wind

Information showed. The overnight repo average fell to 0.7888% from 0.8355% on

Thursday.

     YUAN: The currency strengthened to 7.0661 against the dollar from

Thursday's close of 7.0910. PBOC set the dollar-yuan central parity rate higher

for the fourth trading day at 7.1052, compared with 7.0522 on Thursday.

     YUAN: The PBOC plans to issue CNY10 billion 6-month offshore bills in Hong

Kong on March 26 to "enrich high credit rating yuan products and improve yuan

yield curve," PBOC said on its website today.

     BONDS: The yield on 10-year China Government Bonds was last at 2.6700%,

down from Thursday's close of 2.7250, according to Wind Information.

     STOCKS: The Shanghai Composite Index rallied 1.61% to 2,745.62. Hong Kong's

Hang Seng Index gained 5.05% to 22,805.07.

     FROM THE PRESS: Promoting the full resumption of work and production will

be the most urgent task for China after the first zero growth of new COVID-19

cases in the pandemic epicentre of Hubei province on March 18, the Securities

Times said in a front-page commentary. To resume work and production as soon as

possible is vital to stabilize employment and achieve the country's economic

goals, the commentary said. The newspaper said the resumption would also drive a

recovery in the A-share stock market.

     China is likely to open more areas to foreign investment including medical

care, elderly care, finance, transportation, logistics, tourism, education and

telecommunications through the introduction of a shortened so-called negative

list as early as May, the Economic Information Daily reported citing Zhang Fei,

a deputy director of the Institute of Foreign Investment Research at the

Ministry of Commerce.

--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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