MNI China Daily Summary: Monday, April 15

     POLICY: China's prudential monetary policy will be neither too tight nor

too loose this year, and the growth of M2 and aggregated financing will match

the growth of nominal GDP growth, Chen Yulu, deputy governor of the People's

Bank of China (PBOC), said at a weekend meeting in Washington D.C. hosted by the

International Monetary and Financial Committee, according to a statement on the

PBOC website. China will improve the "double pillar" regulation framework based

on monetary policy and macro-prudential policy, accelerate building financial

market infrastructures, improve exchange rate formation mechanism, and keep the

yuan rate stable at a reasonable level, Chen said.

     DATA: China's capital outflow slightly eased in March from February as

indicated by FX purchase positions published on Monday by the PBOC. The purchase

positions last month fell for the eighth month by CNY460 million to CNY21.3

trillion, compared with the CNY330 million decline in February.

     LIQUIDITY: The PBOC skipped open market operations for the 18th straight

trading day today, leaving liquidity unchanged as no reverse repos matured,

according to Wind Information. Total liquidity in the banking system remains at

a reasonable and ample level, according to the PBOC.

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

institutions (DR007) rose to 2.8000% from the close of 2.6691% on Friday, Wind

data showed. The overnight repo average rose to 2.9000% from 2.6485% on Friday.

     YUAN: The yuan strengthened to 6.7059 against the U.S. dollar from the

close of 6.7145 on Friday. The PBOC set the dollar-yuan central parity rate at

6.7112 today, compared with 6.7220 set last Friday.

     BONDS: The yield on the 10-year China Government Bond (CGB) was last at

3.3800%, up from the close of 3.3450% on Friday, according to brokers.

     STOCKS: The benchmark Shanghai Composite Index fell 0.34% to 3,177.79. Hong

Kong's Hang Seng Index decreased 0.33% to 29,810.72.

     FROM THE PRESS: The PBOC may not need to cut the reserve requirement ratio

in the short term because liquidity is still abundant in the financial system,

given signs of a strong rebound in the March money supply and fresh credit data,

the China Business News reported citing Sheng Songcheng, a former advisor to

China's central bank. Sheng also predicted that policymakers may relax

restrictions on shadow banking, noting that the contraction in off-balance sheet

financing by entrusted loans, trust loans and undiscounted bankers' acceptances

had decelerated since last November, according to the newspaper.

     China is unlikely to carry out stronger stimulus in the short term given

that the economy is showing signs of stabilizing, according to a report in the

Economic Information Daily today. China is still facing downward pressure and

the fundamentals are not good enough for policymakers to change the loosening

bias in policies formulated so far this year, which dispel market concerns about

possible tightening, the daily said.

     Chinese manufacturers that are big exporters to the US have accelerated the

move of factories to Vietnam, the 21st Century Business Herald reported.

Vietnam's tariff-free policy and low tax rate are major attractions for the

Chinese companies, the newspaper said. U.S. retailers in the furniture, home

appliance and tire sector have been shifting their import orders from China to

Vietnam, the Herald said citing trade data company Panjiava. The U.S. has

reduced tire imports from China by 28.6%, while increasing imports from Vietnam

by 141.7%, according to the report.

--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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