MNI China Daily Summary: Monday, April 22

     TOP NEWS: China's Belt and Road Initiative did not lead any country that

had joined into a debt trap and many that took part have developed rapidly, Xiao

Weiming, an official at the Office of the Leading Group on Promoting the

Implementation of "Belt and Road" Initiatives, said in a briefing today. Poorer

countries still have the right to develop by adding leverage, Song Lihong, an

inspector at the General Department of the Ministry of Commerce, said in the

same briefing. Developed countries and emerging powers like China must help them

obtain financing, while borrowers should restrain spending and focus on

industrialization through infrastructure construction and industrial investment,

Song said.

     LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations

(OMO) on Monday, 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 3.1000% from the close of 2.6859% on Friday, Wind

data showed. The overnight repo average fell to 2.5600% from 2.6540% on Friday.

     YUAN: The yuan weakened to 6.7125 against the U.S. dollar from the close of

6.7034 on Friday. The PBOC set the dollar-yuan central parity rate at 6.7035

today, compared with 6.7043 set on last Friday.

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

3.4075%, up from the close of 3.3700% on Friday, according to brokers.

     STOCKS: The benchmark Shanghai Composite Index fell 1.70% to 3,215.04,

dampened by the drop of financial, real estate and home appliance shares,

according to Wind Information. Hong Kong's Hang Seng Index decreased 0.54% to

29,963.26.

     FROM THE PRESS: The politburo meeting held last Friday sent a strong signal

that further reform measures will be rolled out, said the Financial News, a

newspaper run by the PBOC. The politburo for the first time blamed the slowing

economy on the so-called "institutional factors", a signal that short-term

stimulus cannot solve the structural and institutional problems and the

government should deepen medium- and long-term reform once the economy recovers

and stabilizes, the newspaper said.

     China will need more overseas capital to underpin economic growth, said The

Paper on Saturday citing Fang Xinghai, deputy chairman of the China Securities

Regulatory Commission. China's current account was barely in equilibrium last

year, which suggested the country's savings may be insufficient to support

investment, a phenomenon unseen since 1993, Fang was cited as saying by the

newspaper. China's investment growth therefore needs more foreign capital as the

aging society and changing consumption of the younger generation reduce savings,

the newspaper said citing Fang.

     The PBOC is likely to further selectively cut reserve requirement ratios

for some banks to ease the financing difficulties for private and small

companies, said the Securities Daily citing Wu Qi, a senior researcher at

Pangoal Institution, a Beijing-based think tank. Cutting RRRs for all

institutions isn't likely as the liquidity is ample and March indicators pointed

to a recovery, the daily said citing Wu.

--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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