MNI China Daily Summary: Friday, September 14

     DATA: China's industrial production grew by 6.1% y/y in August, leaving the

Jan-Aug y/y gain at 6.5%. Fixed-asset investment rose at a record low pace of

5.3% y/y in Jan-Aug from a year earlier, while property investment growth cooled

to 10.1% from 10.2% in Jan-Jul. Retail sales growth picked up to 9.0% y/y in

August, beating expectations that it would hold steady at July's 8.8%. The

surveyed unemployment rate registered at 5.0% in August, down 0.1pp from July.

     LIQUIDITY: The People's Bank of China injected CNY110 billion via 7-day

reverse repos and CNY40 billion via 14-day reverse repos, to maintain

"reasonable and ample" liquidity. Rates were kept unchanged at 2.55% and 2.70%

respectively. The CFETS-ICAP money-market sentiment index closed at 36, down

from 37 on Wednesday.

     YUAN: The yuan appreciated to 6.8470 per dollar from Thursday's close of

6.8487. The PBOC set the yuan central parity rate at 6.8362, stronger than

Thursday's 6.8488.

     MONEY MARKET RATES: The benchmark seven-day deposit repo average decreased

to 2.6189% from 2.6366% Thursday, while the overnight average fell to 2.4773%

from 2.5043%: Wind Information.

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

3.6500%, down from Thursday's close of 3.6600%, according to Wind Information.

     STOCKS: The Shanghai Composite Index closed 0.18% lower at 2,681.65. Hong

Kong's Hang Seng Index rose 0.94% to 27,272.37.

     FROM THE PRESS: The yuan may strengthen to around 6.75 per dollar in Q4 as

policymakers seek a degree of currency stability and implement macro-prudential

controls and cross-border capital regulations, the Securities Daily said, citing

Wang Youxin, a researcher at the Bank of China International. The yuan

strengthened 58bps against the greenback on Thursday, largely on dollar

weakness, but also reflecting reports of a planned resumption in China-U.S.

trade talks, Wang added. While Fed rate tightening may weigh on the yuan in

September, the prospect of conflictive U.S. midterm elections may offset this

impact, the newspaper said.

     Debt levels among China's state-owned enterprises (SOEs) remain high and

need to be reduced further, the Economic Information Daily reported Friday,

citing Zhou Jianqi, a researcher at the State Council's Development Research

Centre. Zhou commented on a circular published by the cabinet, which calls on

SOEs to bring debt ratios down by an average of 2pp by end-2020. At the end of

July, the average SOE debt-to-asset ratio was 64.93%, down by 0.8pp from a year

ago, the newspaper said, citing Ministry of Finance data. The circular called

for closer monitoring of companies and greater controls on investment and

spending, the Daily said.

--MNI Beijing Bureau; tel: +86 (10) 8532-5998; email: flora.guo@marketnews.com

--MNI London Bureau; +44 207-862-7489; email: ukeditorial@marketnews.com

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