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MNI (London)
     POLICY: China should not rush to cut its benchmark interest rates, as any
move by the central bank will have a major impact and there is time to take
stock of the economy's overall standing, the president of a local branch of the
People's Bank of China told MNI in an exclusive interview. China's Prime
Minister Li Keqiang said out this week that both quantitative and pricing tools
could be used to lower real rates, but that didn't necessarily mean the central
bank would "cut rates in short-term," said Guo Xinming, president of the PBOC
Nanjing branch.
     POLICY: Wang Yi, China's Minister of Foreign Affairs, told reporters Friday
the U.S. intended to suppress China including by having Canada detain the CFO of
Huawei Technologies Co. It is an "intentional political suppression" against
specific Chinese companies and individuals, rather than a simple judicial case,
Wang commented. Wang also believes China and the U.S. won't and shouldn't go to
confrontation, as the interests of the two countries are intertwined.
     DATA: China's exports dropped 20.7% y/y in February, worse than -6.5% seen
in the MNI survey forecast. It was the sharpest monthly fall in three years.
Authorities blamed the poor performance on the Chinese New Year holiday, which
shuttered factories and suspended shipments. Exports would have risen 1.5%
discounting the Chinese New Year effect, customs said.
     DATA: Imports fell 5.2% y/y in February, following last month's 1.5% y/y
drop, better than -2.0% projected by the MNI survey. Imports would have gained
6.5% less the holiday impact, the customs said.
     LIQUIDITY: The PBOC skipped open market operations for the seventh trading
day, which left liquidity unchanged as no reverse repos mature, according to
Wind Information. Total liquidity in the banking system is at a reasonable and
ample level, said the PBOC. The PBOC has net drained CNY260 billion by reverse
repo and CNY104.5 billion by Medium-term Lending Facility for the last seven
trading day, Wind Information said.
     RATES: The 7-day weighted average interbank repo rate for depository
institutions (DR007) fell to 2.1000% from Thursday's close of 2.3960%, Wind
Information showed. The overnight repo average decreased to 2.0400% from
Thursday's 2.0583%. 
     YUAN: The yuan depreciated against the dollar to 6.7269 from Thursday's
close of 6.7074. The PBOC set the dollar-yuan central parity rate weaker at
6.7235, compared with 6.7110 set on Thursday.
     BONDS: The yield on 10-year China Government Bond was last at 3.165%, down
2.5 bps from the close of Thursday, according to brokers.
     STOCKS: The benchmark Shanghai Composite Index fell 4.40% to 2,969.86,
falling below the 3000 level and marking the largest drop in about five months,
Wind Information said. Hong Kong's Hang Seng Index dropped 1.91% to 28,228.42.
     FROM THE PRESS: The National People's Congress, China's senior legislative
body will accelerate the start of drafting property tax laws this year, said
China Youth Daily today citing Li Zhanshu, the chairman of the Standing
Committee of the NPC during the second session of the 13th NPC today.
     The People's Bank of China (PBOC) should continue with the structural
deleveraging, mainly in SOEs, and controlling the macro leverage ratio,
Financial News said citing Wang Jingwu, director of the Financial Stability
Bureau of the PBOC. A large inventory of hidden local government debt, rising
risks of bond defaults and the real estate sector are three areas that may fan
instability in the financial industry, Wang was cited as saying.
     First-tier cities in China have moved to lower their additional VAT rate on
housing transactions by 50%, The Beijing News reported on Friday. This policy
may have little impact on the market overall, as it only reduces some smaller
taxes, not those major ones including VAT, deed tax and individual income tax in
the property market, the newspaper said citing Zhang Dawei, chief analyst at
Centraline Property Agency.
--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com