MNI China Daily Summary: Monday, March 11

     POLICY: The room to cut reserve requirement ratios (RRR) has decreased in

the last two years, the People's Bank of China (PBOC) Governor Yi Gang told

reporters on Sunday. The current level is not high compared with advanced

economies after making five cuts totaling 3.5 percentage points since 2018, 

Policymakers also need to consider risk prevention and good use of resources

while deciding RRR level. The PBOC will further simplify the framework of the

RRR system and treat big, medium and small banks accordingly, Yi said.

     TRADE TALKS: China and the U.S. discussed how to respect each country's

monetary authority's autonomy deciding monetary policies, adhering to the

principle of letting the market decide exchange rate, living up to promises made

in each G20 summit, so as not engaging in competitive devaluation or using

exchange rate for competition and maintain close communication on FX markets, as

well as data disclosure according to IMF rules, PBOC Governor Yi told reporters.

     TRADE TALKS: China and the U.S. will cancel all the extra tariffs imposed

on each other to bring trade to normal, Wang Shouwen, Vice Minister of Commerce

told reporters Saturday. Teams of negotiators are "working round the clock" to

discuss specific text of a deal, Wang added.

     NPC: Regulators will encourage insurance funds to enter and support the

capital market as long-term funds, though the scale and the use of funds need to

be customized with different industries, said Zhou Liang, deputy chairman of

China Banking and Insurance Regulatory Commission (CBIRC) said on the sideline

of the Chinese People's Political Consultative Conference in Beijing, Securities

Times reported today. 

     DATA: China's passenger car sales in February fell 17.4% y/y to 1.219

million units, extending January's drop of 17.7%, while that of electric cars

grew by 53.6% y/y, compared with 138% in January, according to data released by

China Association of Automobile Manufacturers. 

     LIQUIDITY: The PBOC skipped open market operations for the eighth trading

day, leaving liquidity unchanged as no reverse repos mature, according to Wind

Information. The total liquidity in the banking system is at a reasonable and

ample level, said the PBOC.

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

institutions (DR007) decreased to 2.1000% from the close of 2.2988% on Friday,

Wind data showed. The overnight repo average rose to 2.0900% from 2.0454%

Friday.

     Yuan: The yuan appreciated to 6.7251 against the U.S. dollar from the close

of 6.7269 on Friday. The PBOC set the dollar-yuan central parity rate lower at

6.7202 today than 6.7235 last Friday.

     STOCKS: The benchmark Shanghai Composite Index rose 1.92% to 3,026.99. Hong

Kong's Hang Seng Index increased 0.97% to 28,503.30.

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

3.17%, up 0.5 bps from the close of Friday, according to Wind.

     FROM THE PRESS: The rapid decline in the use of bill financing and

undiscounted bankers' acceptance last month was caused by the Chinese New Year,

when companies had less settlement demand and working days, reported Financial

News, a publication of the PBOC, citing an unidentified PBOC official. A more

accurate reading would combine data for the first two months, during which the

balance of bill financing added CNY685.5 billion, and undiscounted bankers'

acceptance increased by CNY68.3 billion, lending more support to the economy,

the official was cited as saying.

     Regulators should strengthen the monitoring of mortgage loans, strictly

control property loans with investment and speculative intentions, as well as

stop shadow banking capitals from flowing into the real estate market, a crucial

industry for preventing financial risks, said Securities Times on Saturday

citing Wang Zhaoxing, deputy chairman of the China Banking and Insurance

Regulatory Commission.

     The Chinese monetary authority intends to lower the actual rates by

liberalizing market interest rates, so future adjustment of the benchmark

deposit and lending rates will be less likely, and the benchmark rates could

even be removed eventually, Lian Ping, chief economist at Bank of

Communications, commented in China Securities Journal published on Sunday.

--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

[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]