MNI China Daily Summary: Monday, January 20

     EXCLUSIVE: The People's Bank of China (PBOC) may make further reductions to

money market rates or banks' reserve requirement ratios after the first quarter,

as consumer price inflation moderates, policy advisors told MNI. Such moves

would cut financing costs for infrastructure projects key to officials' hopes of

boosting the economy, as well as assist the drive for local governments to lower

debt burdens, said Zhang Ming, senior fellow at the Institute of World Economic

and Politics under Chinese Academy of Social Sciences.

     POLICY: China will boost investment this year by building more intercity

and urban railways and highways, undertaking major water conservation projects

and renewing old urban communities and their supporting infrastructure, said

spokeswoman Meng Wei of the National Development and Reform Commission at a

briefing on Sunday.

     LIQUIDITY: The PBOC injected CNY250 billion via 14-day reverse repos with

the rate unchanged at 2.65%, according to a statement on the PBOC website. The

move aims to hedge government bond issuance and offset peak cash demand, keeping

reasonable and ample liquidity before the Chinese New Year holiday, PBOC said.

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

institutions (DR007) decreased to 2.5708% from Friday's close of 2.5916%, Wind

Information showed. The overnight repo average fell to 2.2271% from Friday's

2.3886%.

     YUAN: The yuan weakened to 6.8613 against the U.S. dollar from Friday's

close of 6.8585. PBOC set the dollar-yuan central parity rate lower at 6.8664,

compared with 6.8878 on Friday. Today's fixing is the biggest daily rise since

Jan 8, 2020.

     BONDS: The yield on 10-year China Government Bond was last at 3.0800%, down

from Friday's close of 3.1075%, according to Wind Information. 

     STOCKS: The Shanghai Composite Index gained 0.66% at 3,095.79. Hang Seng

Index lost 0.90% to 28,795.91. 

     FROM THE PRESS: China will continue the policy of cutting fees and taxes

this year, according to a commentary published by Economic Daily. China

implemented the biggest national tax cut campaign in 2019, leading to only 0.5%

increase in tax revenue to CNY14.97 billion, the daily said.

     The PBOC may roll over the Targeted Medium-Term Lending Facility (TMLF) set

to mature this Thursday with extra funds, the Securities Times reported citing

Ming Ming, the chief analyst at CITIC Securities. The central bank will continue

to conduct reverse repos before the Chinese New Year, although on a smaller

scale and a CNY1.3 trillion liquidity gap in January remains after the PBOC

injected CNY1.9 trillion, the newspaper cited Ming as saying.

     China should stabilize employment, investment and trade to help achieve its

goal of building a well-off society this year, outlined in the 13th Five-Year

Plan, the Economic Information Daily said in a commentary. Macroeconomic

policies should maintain continuity and countercyclical adjustment should be

reinforced against economic downturn, the daily said.

     Prices of steel may rise this year given expected economic recovery may

boost demand by 2% while supply won't keep up, the Economic Information Daily

reported citing a forecast from the China Iron and Steel Association. 

--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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