Free Trial

MNI China Daily Summary: Friday, September 28

     TOP NEWS: Chinese authorities should focus their energies on better honing
their deleveraging drive and boosting credit to the real economy, rather than on
the trade war with the U.S., a former advisor to the People's Bank of China
(PBOC) told MNI. "The impact of the trade war on China's economy is limited,"
said Li Daokui, also a member of the Economy Committee under the National
Committee of the Chinese People's Political Consultative Conference (CPPCC).
"What's most needed is to adjust our financial policies, which are not
implemented in a well-targeted way." Current financial policies, especially
those concerning deleveraging, are "too simple and too blunt," Li said.
     POLICY: A Ministry of Commerce spokesperson said Washington should not
underestimate Beijing's determination to stand up for itself in the trade
dispute. "Bullying and extreme pressure methods will not scare China or make
China's economy collapse," Gao Feng said.
     LIQUIDITY: The PBOC skipped open market operations on Friday, resulting in
a net liquidity drain of CNY40 billion, as the same amount of reverse repos
matured, according to Wind Information. The PBOC said banking system liquidity
is at a relatively high level due to quarter-end fiscal expenditure. It was the
third straight trading day the PBOC has skipped OMO and the sixth consecutive
trading day it has drained net liquidity. CFETS-ICAP's money-market sentiment
index closed at 41 on Thursday, up from 39 on Wednesday.
     MONEY MARKET RATES: The 7-day repo average dropped to 2.6931% from 2.6957%
Thursday. The overnight repo average decreased to 2.4125% from Thursday's
2.4287%.
     YUAN: The yuan depreciated to 6.8851 against the U.S. dollar from
Thursday's closing of 6.8770. The PBOC set the yuan central parity rate weaker
for a fourth straight trading day at 6.8792 on Friday, compared with 6.8642 on
Thursday.
     BONDS: The yield on the benchmark 10-year China Government Bond was last at
3.6350%, according to Wind Information.
     STOCKS: The benchmark Shanghai Composite Index closed 1.06% higher at
2821.35. Hong Kong's Hang Seng Index rose 0.08% to 27,736.65.
     FROM THE PRESS: It is "wrong and one-sided" to argue that state-owned
enterprises (SOEs) should be abandoned or scaled down, Chinese President Xi
Jinping said on Thursday, according to news agency Xinhua. China should continue
to strengthen and expand its SOEs, Xi stressed during a visit to Liaoning
Province. The Communist Party should continue to manage SOEs, which should
continue to establish modern working practices, the premier stated, according to
Xinhua.
     The PBOC is likely to implement targeted RRR cuts to support technological
development and entrepreneurship, the Securities Daily reported. The policy
could be announced soon after the week-long National Day Holiday. Authorities
are endeavouring to stabilise domestic demand and improve the transmission of
monetary policy to the real economy, said Zhou Chenghua, a fixed income
researcher at Citic Securities.
     Rapid consumption growth will continue to support China's economy, even as
growth slows, said Niu Li, deputy director of the economic forecasting
department at the State Information Centre, according to the official People's
Daily. Stable investment growth, buoyed by supportive policies, and efforts to
diversify export markets also bode well for economic resilience, Niu added,
according to the newspaper. Despite domestic and external challenges including
trade frictions with the U.S., these factors will help China to achieve this
year's growth target, said Xu Wei, researcher at the macro-economy research
department of the Development Research Centre of the State Council.
--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com
--MNI London Bureau; +44 207-862-7489; email: ukeditorial@marketnews.com
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.