MNI China Daily Summary: Monday, April 23

     TOPS NEWS: China welcomes U.S. officials coming to Beijing to negotiate

ongoing China-U.S. trade tensions, said China Ministry of Commerce in a

statement on Sunday, in response to U.S. Treasury Secretary Steven Mnuchin

saying "a trip (to Beijing) is under consideration" on Saturday in Washington

D.C.

     TOP NEWS: Hainan, which is set to become a pilot area for China's

free-trade port, surprisingly issued property purchase tightening policies on

Sunday night. The measures are aimed at curbing speculation in the province's

property sector and improving the long-term property market system, the Hainan

government said in a statement. All districts of Hainan have imposed strict

requirements for home purchases, with only locals allowed to buy houses in four

central districts - Wuzhishan, Baoting, Qiongzhong and Baisha. All houses cannot

be resold on the secondary market until five years after the owner receives

property ownership certificates.

     LIQUIDITY: The PBOC injected CNY80 billion in 7-day reverse repos, with the

rate unchanged at 2.55%, which it announced on its website Monday morning

without giving further explanation. This resulted in unchanged liquidity

conditions as the same amount of reverse repos matured today. A total of CNY520

billion in reverse repos will mature this week. CFETS-ICAP's money-market

sentiment index closed at 74 on Friday, slightly down from 76 on Thursday. 

     MONEY MARKET RATES: 7-day repo average fell to 2.9549% from 3.0441% on

Friday, after PBOC's injection of CNY80 billion in 7-day reverse repos resulted

in no change in liquidity conditions. The overnight repo average dropped to

2.7503% from Friday's 2.8367%.

     YUAN: The yuan fell against the U.S. dollar after PBOC set a weaker daily

fixing. The yuan fell 0.03% to 6.2951 against the U.S. unit, compared with the

official closing price of 6.2898 yesterday. The People's Bank of China set the

yuan central parity rate at 6.3034 on Monday, weaker than last Friday's 6.2897,

marking the fourth consecutive trading day that the central bank has set a

weaker fixing.

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

3.5950%, up from the previous close of 3.5250%, according to Wind Information.

     STOCKS: Shares were down in Shanghai, led lower by computer and

computer-related tech companies on worries that U.S. measures to restrict sales

of chips to Chinese mobile phone maker ZTE could extend to other Chinese tech

companies. ZTE stocks were suspended on Chinese stock market in order to protect

investors. The benchmark Shanghai Composite Index 0.11% lower at 3,068.01. Hong

Kong's Hang Seng Index was down 0.54% to 30,255.18.

     FROM THE PRESS: Technology is key to China's development, and China should

speed up its breakthroughs in information technology, Chinese President Xi

Jinping said at an internet and IT-related government conference, according to

Xinhua News Agency. China should make its own chips, as the U.S. has forbidden

American chip-makers from selling chips to the Chinese mobile-maker ZTE for

seven years, and should aim to win a "turnaround battle", said Xi.

     China's capital flow is basically balanced, and the yuan exchange rate

remains stable, said PBOC Governor Yi Gang at the IMF Spring Meetings in

Washington, reported Caixin. The yuan fluctuates based on demand and supply in

the market and adjusts itself against a basket of currencies, Yi said. The yuan

exchange rate scheme is operating well, and its good momentum will continue, Yi

added. He stressed the PBOC has not intervened in the FX market "in quite a long

time". As trade tensions between China and the U.S. remain high, the best course

of action for China is developing its economy, continuing reforms and the

opening up of its financial sector, Yi stated.

     China's state-owned enterprises should further open up and cooperate with

multinational corporations, said Xiao Yaqing, head of SASAC, according to China

Securities Journal. China should encourage the participation of more foreign

companies in the mergers and acquisitions as well as the reforms of SOEs,

especially in energy and mineral resources, Xiao said. Chinese companies need to

strengthen innovation and development, and should no longer be restricted by

other countries in certain areas.

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

--MNI Singapore Bureau; +65 8233 2326; email: Asia-Editor@marketnews.com

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