MNI China Daily Summary: Friday, May 15

     EXCLUSIVE: A consensus is forming among Chinese officials that the country

requires economic growth of about 3% in 2020, although in a departure from usual

practice, a formal target may not be announced at next week's National People's

Congress, policy advisors told MNI, following speculation the government might

forego a GDP objective altogether due to global coronavirus disruption.

     POLICY: China's economy has not yet returned to levels seen in previous

years, despite April's economic indicators showing a pick up from March levels,

said Liu Aihua, a spokeswoman for the National Bureau of Statistics Friday.

     LIQUIDITY: The People's Bank of China (PBOC) injected CNY100 billion via

one-year medium-term lending facility (MLF) on Friday with the rate unchanged at

2.95%. The cut to selected banks' reserve requirement ratios by 0.5 percentage

point announced in April also took effect today, releasing CNY200 billion

long-term funds. These operations injected net CNY300 billion as no MLF matures

today.

     DATA: 

-Industrial production grew 3.9% y/y in April, reversing the 1.1% lost in March

and outpacing the projected 1.8% gain. 

- Retail sales fell 7.5% y/y, recovering from the 15.8% slump in March.

- Fixed-asset Investment dropped -10.3% in the first four months, picking up

moderately from the -16.1% decline in Q1 but weaker than the -9.7% projection.

- Infrastructure investment growth recovered to -11.8% y/y in the Jan-April

period from the -19.7% plunge in Q1. 

- Registered urban unemployment rose to 6.0% in April from March's 5.9%.

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

institutions (DR007) decreased to 1.1500% from Thursday's close 1.3179%, Wind

Information showed. Overnight repo average rose to 0.8590% from 0.7398%

yesterday.

     YUAN: The yuan weakened to 7.0995 against the dollar from Thursday's close

7.0948. PBOC set the dollar-yuan central parity rate lower at 7.0936, down from

the 7.0948 set on Tuesday.

     BONDS: The yield on 10-year China Government Bonds was last at 2.5289%,

down from Thursday's close of 2.5300%, according to Wind Information.

     STOCKS: The Shanghai Composite Index lost 0.07% to 2,868.46. Hong Kong's

Hang Seng Index lost 0.14% to 23797.47.

     FROM THE PRESS: China does not believe that Washington will "cut off the

whole relationship" as U.S. President Trump suggested in an interview on

Thursday, according to the Communist Party tabloid Global Times. In an

editorial, the newspaper said it was "no surprise to hear more absurd ideas from

Trump" in the run-up to the U.S. presidential election. However, the Times

warned that China should be prepared for "a partial or complete decoupling" in

some sectors, including technology.

     China will step up pandemic prevention measures in Heilongjiang and Jilin

provinces in the northeast with more cases of Covid-19, according to a statement

from the Politburo Standing Committee. A statement from the committee, chaired

by President Xi Jinping, also required Wuhan, the epicentre of the pandemic in

China that also saw new cluster cases, to increase testing. Xi also said the

government would promote the retailing and life service industries to normal

levels.

     China will add more domestic banks to the list of systemically important

banks (D-SIBs), a move which will see them subject to increased regulations,

according to Cao Yu, a vice chairman of the China Banking and Insurance

Regulatory Commission (CBIRC). In a commentary published in the China Banking

and Insurance News, a media outlet affiliated with the regulator, Cao said that

196 regional Chinese banks are among the Top 1000 in the world according to

their Tier-1 capital levels, a hint that they should be treated as D-SIBs. China

currently requires banks on this list to have additional capital equal to 1% of

risk-weighted assets.

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

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

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