MNI China Daily Summary: Friday, September 6

     POLICY: China will accelerate measures for reducing real lending rates,

including across-the-board and selected cuts of banks' required reserve ratios,

to counter the growing challenges to the economy, Ning Jizhe, a vice chairman of

the National Development and Reform Commission, said at the China Development

Forum today. China will enhance countercyclical moves to keep growth at a proper

range. It will use more proactive fiscal policy and make tax-and-fee cuts more

effective, said Ning.

     LIQUIDITY: The People's Bank of China (PBOC) injected CNY40 billion via

7-day reverse repos, with no reverse repos maturing today, according to Wind

Information. The PBOC has drained a total of CNY100 billion this week, Wind

Information said.

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

institutions (DR007) rose to 2.6631% from Thursday's close of 2.6239%, Wind

Information showed. The overnight repo average increased to 2.5926% from

Thursday's 2.5381%. 

     YUAN: The yuan strengthened to 7.1243 against the dollar from Thursday's

close of 7.1459. The PBOC set the dollar-yuan central parity rate higher at

7.0855, compared with 7.0852 on Thursday.

     BONDS: The yield on 10-year China Government Bonds was last at 3.0145%, up

from the close of 3.0125% on Thursday, according to Wind Information. 

     STOCKS: The Shanghai Composite Index increased 0.46% to 2,999.60. Hong

Kong's Hang Seng Index edged up 0.66% to 26,690.76. 

     FROM THE PRESS: Restarting trade talks is the best way forward for both

China and the U.S. but should focus on achieving tangible results, Xinhua News

Agency said in a commentary. China's approach is principled and there is a

bottom line to its position. The U.S. must abide by the previous consensus and

approach with mutual respect, Xinhua said.

     Chinese Vice Premier Liu He urged financial regulators to increase

countercyclical adjustment, smoothen the transmission mechanism for monetary

policy and strengthen the coordination of financial and fiscal policies,

according to a statement on the government website. Regulators should support

banks with innovative tools for capital supplements and guide banks to increase

medium and long-term support for manufacturing and private enterprises, the

government said.

     China may allow more than CNY1.8 trillion of next year's local government

bonds to be issued in advance, the Securities Daily reported, citing Liu

Chenhan, chief analyst at Northeast Securities. The total quota of local

government bonds next year would be around CNY3.4 trillion, of which 20% can be

used for capital projects, adding CNY2 trillion in project finance, the daily

said.

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

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

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