MNI China Daily Summary: Monday, June 3

     TOP NEWS: China will soon grant 5G licenses for commercial use, the

Ministry of Industry and Information Technology said on its website today. China

welcomes domestic and overseas companies to actively participate in the

construction of its 5G network, the ministry said. Foreign companies such as

Nokia, Ericsson, Qualcomm and Intel were involved in the testing phase, helping

lay the foundation for the commercialization of the new mobile communication

technology, the ministry said.

     POLICY: China on Sunday tried to shift the blame onto the U.S. for the

stalled trade talks after enacting retaliatory tariffs, signalling a hardened

stance and preparedness for a protracted conflict. In a so-called white paper

outlining its positions on the trade negotiations, China said that an agreement

can only be reached when the U.S. removes all punitive tariffs imposed and it

will make no concessions on matters of principle and "take on the fight to the

finish," while still keeping the door open for negotiations. "The U.S. violated

the consensus, walked back on promises during the economic and trade talks; it

fails to be trustworthy," China said in the white paper.

     DATA: The Caixin PMI recorded 50.2 in May, unchanged from April and in the

expansion zone above 50 for the third consecutive month. New orders, which

indicate future activity levels, accelerated rapidly with the growth rate

slightly faster than in April, Caixin said in a statement. New export orders

rebounded significantly to a high level. Many manufacturers surveyed said that

recovering external demand and new product launches had driven the growth in new

orders.

     LIQUIDITY: The People's Bank of China (PBOC) injected CNY80 billion via

7-day reverse repos, resulting in no change to liquidity given that CNY80

billion of reverse repos matured today, according to Wind Information.

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

institutions (DR007) fell to 2.4600% from the close of 2.6308% on Friday, Wind

data showed. The overnight repo average fell to 2.0000% from 2.1609% on Friday.

     YUAN: The yuan weakened to 6.9097 against the U.S. dollar from Friday's

close of 6.9020. The PBOC set the dollar-yuan central parity rate at 6.8896,

compared with last Friday's 6.8992.

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

3.2550%, down from the close of 3.2800% on Friday, according to Wind

Information.

     STOCK: The benchmark Shanghai Composite Index fell 0.30% to 2890.08. Hong

Kong's Hang Seng Index decreased 0.03% to 26,893.86.

     FROM THE PRESS: The PBOC should cut the reserve requirement ratio or use

the medium-term lending facility (MLF) to offset the cash drain due to the

upcoming maturities of some instruments, the Securities Daily reported citing

Ming Ming, chief analyst at CITIC Securities. This week, CNY530 billion reverse

repos are due to mature as well as CNY463 billion one-year MLF on June 6, the

newspaper said.

     The PBOC has no plans to take over other domestic lenders after the seizure

of Baoshang Bank, the central bank said in a statement on its website late

Sunday. Liquidity in the banking system is currently at an ample level and

financial risks are generally controllable, said the PBOC, which sought to

dispel market concerns of another bank seizure.

     The Chinese capital market is more resilient than before, enough to

withstand the impact of the trade frictions with the U.S., CCTV reported on

Sunday citing Yi Huiman, the chairman of the China Securities Regulatory

Commission. The market has factored in the potential impact of the trade dispute

since May, and the capital market will remain stable in the long run, CCTIV said

citing Yi.

--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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