MNI China Daily Summary: Monday, March 5

     BEIJING (MNI) - DATA: China aims to keep its economy growing at a

moderately slower pace of about 6.5% this year, compared with actual 6.9%

expansion in 2017, according to Premier Li Keqiang's report at the National

People's Congress. That is the same target though as last year. Inflation will

be capped at about 3%, the government said. While seeking continuity and

consistency in macro policies, China will keep its fiscal policy "proactive,"

with 2.6% targeted debt-to-GDP ratio, a reduction of 0.4 percentage point from

last year.

     DATA: Growth in China's services sector remained strong in February with

both business activity and new orders rising, according to the latest survey of

purchasing managers jointly released by Caixin and Markit Monday. The Caixin

Service PMI eased to 54.2 in February from 54.7 in January, but still marked the

second highest reading since March 2013.

     RATES: Interbank market rates diverged after the PBOC refrained from

conducting Open Market Operations, effectively draining CNY100 billion into the

market. The 7-day repo average fell to 2.8755% from 2.9150% Friday, while

overnight repo average is down at 2.6288% from 2.7646%.

     YUAN: The yuan edged up against the U.S. dollar to trade at 6.3403 compared

with Friday's close of 6.3472. PBOC set the yuan central parity rate vs the U.S.

dollar at 6.3431 on Monday, weaker than last Friday's 6.3334.

YUAN: China's currency rebounded from its dip last week on a trade-weighted

basis against the currencies of its major trading partners, according to weekly

data released on Monday by the PBOC. The CFETS Weekly RMB Index, which measures

the yuan relative to a basket of 24 currencies, gained 0.49% last week from a

week ago to 96.27 - catching up on ground lost in the past two weeks.

     BONDS: The yield on benchmark 10-year China Government Bond was at 3.8551%,

compared with the previous close of 3.8373%.

     STOCKS: The Shanghai Composite Index edged up 0.1% to close 3,256.93, while

the Hang Seng Index was down 2.3% to 29,874.03.

     FROM THE PRESS: China must control monetary supply and limit increases in

lending, which are the most important steps in preventing financial risks,

reported the official Shanghai Securities News on Sunday citing Yang Weimin, the

deputy head of Central Leading Group on Financial and Economic Affairs. China

must further increase supervision of the financial industry, not loosen it, Yang

was cited as saying. China must continue to deepen supply-side reform, and

remove zombie companies and excess capacity, Yang said. Local governments most

borrow with prudence, not excessively nor through hidden means, Yang said. China

needs to contain "some bubbles" in the property market of some top three-tier

cities and it needs to not actively "pinch" the bubbles, or make them bigger,

the newspaper reported Yang as saying. 

     China will strengthen its economic monitoring, forecasting and warning

systems to help improve the government's foresight, Xinhua News Agency reported

Sunday, citing a communique from the Communist Party's Third Plenum concluded

over the weekend. China will "strengthen and optimize financial management

capabilities," and increase coordination among monetary policies,

macro-prudential policies and financial regulations. China must guard its last

line of preventing system financial risks and defend the country's financial

safety, it said. Overall, China will strengthen the control of power by the

Communist Party, which is lacking in some areas of the government. It will also

deepen reform of the governing structure and allow the market to better allocate

resources. 

     China will keep strict controls over the property markets this year, the

21st Century Business Herald reported, citing unidentified analysts. More

second- and third-tier cities are set to introduce policies that will curb real

estate growth, the Herald said. Overall property transactions will decline this

year, the newspaper said, citing analysts. Cities of Sanya, Wuhan and Kunming

have recently published guidelines to strengthen controls, including limiting

prices, sales volume and regulation of purchase deposits, reported the Herald.

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

--MNI Beijing Bureau; tel: +86 (10) 8532-5998; email: beijing@mni-news.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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