MNI China Daily Summary: Monday, February 25

     TOP NEWS: China's benchmark Shanghai Composite Index jumped 5.60%, the most

in three and half years, to 2,961.28, back to 2,900, the level unseen since July

25, 2018. The market continued its notable rally since last Friday on the back

of the weekend's Sino-U.S. trade developments and growing optimism surrounding

the potential for a Trump-Xi summit. While Hong Kong's Hang Seng Index rose

0.50% to 28,959.30, the highest since June 25 last year.

     TRADE: China-U.S. trade talks have made substantial progresses on specific

issues in technology transfer, intellectual property protection, non-tariff

trade barriers, service sector, agriculture, and exchange rates, Xinhua News

Agency said. On this basis, the two sides will follow the instructions of the

two heads of states to take the next step, Xinhua News Agency reported today.

Xinhua also commented that the trade talks will be harder at the final stage,

and new uncertainties could occur.

     POLICY: Chinese commercial banks are ordered to set annual targets of

boosting lending to private enterprises by end-March. State-owned commercial

banks should play a leading role to achieve a more than 30% y/y growth in the

balance of SME loans, said China Banking and Insurance Regulatory Commission at

a presser in Beijing today.

     POLICY: As downward pressure on the economy picks up, China's authorities

are increasing measures to reduce wage delays by some businesses, Xin Guobin,

Vice Minister of Industry and Information Technology said at a presser in

Beijing today. The actions aim to stabilize employment and social stability,

whilst ensure companies continue operating, the officials said. The government

is working to establish a long-term mechanism and improve legislation to tackle

the issue, they said.

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

7-day reverse repos, resulting in a net injection of CNY40 billion as no reverse

repos mature, according to Wind Information.

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

institutions (DR007) increased to 2.6400% from the close of 2.5668% on Friday,

Wind data showed. The overnight repo average rose to 2.7000% from 2.4276%

Friday.

     Yuan: The yuan appreciated to 6.6941 against the U.S. dollar from the close

of 6.7186 on Friday, the strongest level since July 17, 2018, helped by the

progress in the Sino-U.S. trade talks. The PBOC set the dollar-yuan central

parity rate at 6.7131 today, lower than the 6.7151 set last Friday.

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

3.18%, up 2.5 bps from the close of Friday, according to Wind.

     FROM THE PRESS: China should take diversified regulatory measures to

control bill financing, as the situations in different provinces vary, said

Xinhua News Agency today citing Sheng Songcheng, a former PBOC advisor. China

should give certain supports to bill financing, as it helps underpin the real

economy, Xinhua said citing Sheng.

     Chinese President Xi Jinping urged deepening financial supply-side

structural reform at a Politburo meeting Friday, including developing customized

financial products and boosting the number of small and medium-sized financial

institutions, Xinhua News Agency reported Saturday. Xi also underlined the need

to balance stabilizing economic growth and preventing risks, further opening up

the financial sector, enhancing the financial capability of serving the real

economy, whilst promoting the healthy development of the financial industry, the

newspaper said.

     China's central bank should not lower the deposit and lending rates in the

near term, the Economic Daily reported today, citing Dong Ximiao, vice president

of Chongyang Institute for Financial Studies at Renmin University of China.

Market rates have already fallen and cutting rates is "too rushed" and may send

the wrong signals to the market, the daily reported citing Dong.

     China's NPL at the end of 2018 gained by 0.15 percentage point, or CNY29

million,  to 1.89%, or CNY2 trillion, from 2017, the China Business News said

citing the China Banking and Insurance Regulatory Commission. Only 10 Chinese

provinces, including Zhejiang, Guangdong, Jiangsu and Guizhou, registered lower

NPLs last year, the newspaper 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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