MNI China Daily Summary: Friday, October 19

     TOP NEWS: China's Q3 GDP growth continues to decelerate, albeit modestly,

coming in at 6.5% y/y in Q3, slowing from 6.7% in Q2 and 6.8% in Q1. Industrial

output fell to 5.8% y/y in September, its lowest level this year, with

fixed-asset investment (FAI)  rebounding slightly to 5.4% y/y in the

January-September period, according to data released by China's National Bureau

of Statistics.

     POLICY: China should not dump its holdings of U.S Treasuries, but act

rationally and not expand the fight into other fields, Fan Gang, a former member

of Monetary Policy Committee of the People's Bank of China said in a speech this

week. "We cannot open a new battleground, particularly into capital markets," he

said.

     LIQUIDITY: The People's Bank of China (PBOC) injected CNY30 billion of

seven-day reverse repos on Friday. It resulted in a net injection of CNY30

billion in liquidity as no reverse repos matured, according to Wind Information.

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

institutions (DR007) increased to 2.6082% from Thursday's close of 2.5822%, Wind

Information showed. The overnight repo average rose to 2.4304% from Thursday's

2.4069%.

     YUAN: The yuan appreciated to 6.9314 against the U.S. dollar from

Thursday's close of 6.9409. The PBOC set a weaker fixing for the third trading

days in five this week at 6.9387, compared with 6.9275 on Thursday.

     BONDS: The yield on the benchmark 10-year China Government Bond was last at

3.5650%, up from the closing price of 3.5425% on Thursday, according to Wind

Information.

     STOCKS: The benchmark Shanghai Composite Index closed 2.58% higher at

2,550.47. Hong Kong's Hang Seng Index decreased 0.42% to 25561.40.

     FROM THE PRESS: The central government must attach great importance to the

difficulties faced by small and medium-sized enterprises (SMEs), and adopt

precise and effective measures to support their development, as discussed at the

meeting of State Council's Leading Group for Promoting SME Development, hosted

by Vice Premier Liu He on Thursday, Xinhua News reported. It is necessary to

deepen the study of policies to support SMEs by reducing their tax burden and

easing their financing difficulties; and to help them in improving environmental

protection, boosting scientific and technological innovation capabilities, and

strengthening international cooperation, participants in the meeting emphasised,

Xinhua said. (Link to the story: https://tinyurl.com/y9fz4vfv)

     Chinese enterprises have not only continued the trend of investing overseas

amid the overall decline of global investment, but will likely expand investment

to a higher level in the future, the People's Daily Overseas Edition said

Friday, citing analysts and the latest foreign direct investment data released

by the Ministry of Commerce. The expansion in overseas investment has stabilised

this year, and enterprises are also paying more attention to the quality of

investment, said Bai Ming, deputy director of International Market Research

Institute under the Ministry of Commerce. Chinese domestic investors conducted

non-financial direct investment in 4,597 overseas companies in 155 countries, at

a total of USD82.02 billion, seeing a rise of 5.1% y/y, the ministry said. (Link

to the story: https://tinyurl.com/ybsb4yr9)

     China's Ministry of Finance is working on larger scale tax cuts and on

further measures to reduce fees, aiming to reduce corporate costs and stimulate

the market, said Yuan Haiyao, an official in the Taxation Department under the

ministry Thursday, Securities Daily reported. This is the second time this month

that the ministry has reiterated its intent to cut taxes and fees. Liu Kun, the

Finance Minister, first addressed the issue on Oct 7, aiming to make fiscal

policy more proactive. (Link to the story: https://tinyurl.com/y7y8wbu2)

--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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