MNI China Daily Summary: Monday, March 2

     POLICY: China's economy will face difficulties achieving "a more optimistic

growth" in the first quarter, Zhang Yansheng, the chief researcher at China

Center for International Economic Exchanges, a think tank under the National

Development and Reform Commission, said at a briefing on Friday. If starting

from March, the emphasis is shifted away from fear and back to more "rational

and science-based prevention path," resumption of work and production is more

orderly, commercial, capital and labour flows return to normal, then Q1's growth

may be better than 1.5%, Zhang said. "But such a scenario will be very difficult

to achieve," added Zhang, an award-winning economist.

     DATA: China's manufacturing Purchasing Manager Index (PMI) plunged to an

all-time low of 35.7 in February, down 14.3 points from the previous month,

giving an early insight of the full impact from the coronavirus epidemic, the

National Bureau of Statistics (NBS) said on Saturday. The March PMI is expected

to improve amid a series of policy supports and accelerated resumption of work,

the NBS said. Up to 94.7 large and medium-sized manufacturers will resume

operations by end-March, 9.1 points higher, according to the NBS survey of

purchasing managers.

     DATA: The Caixin China February PMI fell to 40.3 in February on the impact

from the coronavirus epidemic, down 10.8 points from the previous month, the

lowest since the indicator started in 2004, said Caixin on Monday. The Caixin

PMI tracks small and medium sized manufacturers which are not surveyed by the

NBS.

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

for the 10th day, leaving liquidity unchanged, according to Wind Information.

Total liquidity in the banking system is at a reasonable and ample level, PBOC

said on its website.

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

institutions (DR007) fell to 2.0145% from Friday's close of 2.3231%, Wind

Information showed. The overnight repo average increased to 1.7095% from the

previous 1.6270%.

     YUAN: The currency strengthened to 6.9578 against the dollar from 6.9896 on

Friday. PBOC set the dollar-yuan central parity rate lower at 6.9896, compared

with 7.0066 on Friday.

     BONDS: Yield on 10-year China Government Bond was last at 2.7750%, up from

the close of 2.7550% on Friday, according to Wind Information. 

     STOCKS: The Shanghai Composite Index gained 3.15% to 2,970.93 as new cases

of people contracting the virus declined nationwide, as well as growing

expectations for further stimulus following the bleak PMI data. Hang Seng Index

egded up 0.62% to 26,291.68.

     FROM THE PRESS: Chinese banks are required to extend or renew loans to

medium and small-sized enterprises (SMEs) affected by the coronavirus epidemic

that matured since January 25, according to a statement on the PBOC's website.

Payments of loan interest and capital can be extended up to June 30 without any

penalty interests, PBOC said. Banks should arrange special credit for companies

in the epicentre of Hubei province and strive to reduce the financing costs for

SMEs by more than one percentage point this year from a year earlier, the PBOC

said.

     Seven provinces in China approved infrastructure projects valued at CNY25

trillion with CNY3.5 trillion to be completed in 2020, the China Business News

reported citing Ren Zeping, head of Evergrande Research Institute.

Infrastructure investment is the most effective way to lift the Chinese economy

and help maintain stability and growth through the coronavirus epidemic period.

It can also step up the competitiveness in the long-term, the newspaper said.

     As of Sunday, Ningxia, Beijing, Guangdong and Zhejiang provinces in China

have reported five cases of people bringing Covid-19 from outside the country,

according to Quanshang Zhongguo, an online publication affiliated with

Securities Times. The cases suggested that China could be at the receiving end

as the virus spread more quickly outside the country, 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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