MNI China Daily Summary: Friday, May 17

     POLICY: China's macro policies to boost the economy will help maintain

stability through any escalation of the trade dispute with the U.S., Meng Wei,

the spokesperson of the National Development and Reform Commission told

reporters. The Commission underlined that any fallout from the trade dispute was

manageable as China's economy is resilient.

     DATA: Daily turnover of the Shanghai Stock Exchange declined 8.89% from

March to CNY361 billion in April, compared with March's 54.08% gain, according

to the central bank's monthly report on the financial market. The daily turnover

of the Shenzhen Stock Exchange also fell by 9.69%, compared with 46.23% gain in

March.

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

(OMOs) for the seventh trading day, 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, according to the PBOC. The PBOC has

net drained a total of CNY50 billion via OMOs this week. If including the

injection and maturity of medium-term lending facilities (MLFs), the PBOC has

net drained CNY6 billion.

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

institutions (DR007) rose to 2.9000% from Thursday's close of 2.5692%, Wind

Information showed. The overnight repo average decreased to 2.2000% from

Thursday's 2.2800%.

     YUAN: Dollar-yuan strengthened to 6.9138 from Thursday's close of 6.8821.

The PBOC set the dollar-yuan central parity rate higher for a seventh day at

6.8859, compared with 6.8688 set Thursday.

     BONDS: The yield on the 10-year China Government Bond was last at 3.2600%,

flat from Thursday's close, according to brokers.

     STOCKS: The benchmark Shanghai Composite Index fell 2.48% to 2,882.30, as

fuel cell and block chain stocks fell sharply. While more than 10 domestic chip

shares bucked the downward trend and hit the limit up, following the U.S.

blacklisting Huawei, according to Wind Information. Hong Kong's Hang Seng Index

decreased 1.16% to 27,946.46. 

     FROM THE PRESS: China urgently needs to accelerate its own innovation of

core technologies and stop relying on others, the People's Daily said in a

front-page commentary. The trade dispute with the U.S. has made China more aware

of its overall shortcomings, but there is nothing that can stop China's

rejuvenation, the newspaper said.

     The U.S.'s move to contain a Chinese private tech company Huawei is both

disgraceful and useless, the Global Times said in an opinion piece. Huawei as a

leading 5G network manufacturer has unchallengeable technology, and cutting it

out will also hurt American companies that cross-purchase technologies with

them, the paper said. China should also use diplomatic resources to hedge

against U.S. suppression of Huawei, the paper added.

     The former governor of the PBOC, Zhou Xiaochuan, blasted "certain

newly-came-to-power world leaders" for completely violating economic theory and

common sense, and making policy choices based on commercial instincts, the

Securities Times reported. Without directly naming anyone, Zhou, speaking at a

forum, said such disrespect for science and accumulated knowledge will

eventually hit the wall, according to the newspaper. Such practices will exhaust

the resources of a nation and the world, costing "immense and unparalleled"

capital, Zhou said as reported by the newspaper.

     Home price gains are likely to slow, said the Economic Information Daily

after the official data published yesterday showing housing prices in 70 cities

surveyed have rose for 49 consecutive months. Prices in first- and second-tier

cities may continue to ramp up, thus triggering further regulations, while gains

in third-tier cities have already started to decelerate, the paper said, noting

that the housing market will likely be stable this year.

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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