MNI China Daily Summary: Monday, April 27

     EXCLUSIVE: China will expand trade and investment in Asia in order to

promote the use of the yuan in payments at a time when the coronavirus pandemic

is prompting calls for a reduction in the Chinese share of supply chains, policy

advisors told MNI, although they cautioned that full internationalisation of the

currency would require exchange rate liberalisation and looser capital controls.

     DATA: Combined profits at China's largest industrial companies in March

fell 34.9% y/y, compared to 38.3% decline in Jan-Feb, according to the National

Bureau of Statistics (NBS). Profits in the electronics sector as well as in the

wine, tea and beverage manufacturing sectors grew by 19.5% and 7.5% y/y

respectively, reversing the 87.0% and 21.9% declines in the Jan-Feb period.

Despite the moderate improvement the outlook for profits is dim given weak

market demand, rising inventories, falling industrial product prices and large

cost pressure, the NBS said. 

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

on Monday, leaving liquidity unchanged, according to Wind Information. Liquidity

in the banking system is reasonable and ample, the PBOC said on its website.

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

institutions (DR007) increased to 1.4480% from Sunday's close of 1.2459%, Wind

Information showed. The overnight repo average decreased to 0.8685% from the

previous 0.9037%.

     YUAN: The currency weakened to 7.0836 against the dollar from 7.0829 on

Friday. PBOC set the dollar-yuan central parity rate lower at 7.0703, compared

with 7.0803 set last Friday.

     BONDS: The yield on 10-year China Government Bond was last at 2.5100%, up

from the close of 2.4902% on Friday, according to Wind Information. 

     STOCKS: The Shanghai Composite Index edged up 0.25% to 2,815.49. Hang Seng

Index rallied 1.88% to 24,280.14.

     FROM THE PRESS: China's timely and effective control of the coronavirus

epidemic and the accelerated resumption of production will provide fundamental

support for the stability of the yuan, the PBOC-controlled newspaper Financial

News reported citing Guan Tao, a former official at the State Administration of

Foreign Exchange. Yuan assets had shown strong resilience and had attracted

long-term capital inflows in recent months, Guan was cited as saying. China has

ample room for macro policy manoeuvres to safeguard the stability of its

financial markets, Guan added.

     Two provinces in China have received new front-loaded quotas for

Special-Purpose Local Government Bonds with the issuance required to be

completed before the end of May, according to Yicai, citing sources. The new

CNY1 trillion was announced last Monday, adding front-loaded special-purpose

bonds to CNY2.29 trillion. Special-purpose bonds issued this year may total more

than CNY3.8 trillion this year, an increase of 76% on 2019, Mao Jie, a professor

with the University of International Business and Economics, told Yicai.

     The Standing Committee of the National People's Congress, China's top

legislative body, on Sunday has reviewed the date for the annual NPC meeting

which was postponed in March due to the pandemic, Xinhua News Agency reported,

without disclosing the exact date. The report said 123 members of the standing

committee attended onsite, while 47 attended via online video.

--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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