MNI China Daily Summary: Monday, May 21

     TOPS NEWS: China and the U.S. have reached a consensus while not

compromising on China's bottom line in the trade talks, according to a social

media account managed by the official Communist Party newspaper People's Daily,

which cited Mei Xinyu, a researcher at an academy under China's Ministry of

Commerce. China will not be reducing its exports, though China promised it would

increase imports from the U.S., Mei said. The deal does not require China to

reduce its trade surplus with the U.S. by USD200 billion, which the U.S. had

demanded in the first trade negotiation, he said. The deal defends China's right

to upgrade industries and seek further development, Mei noted. ***Comment: Mei

had previously told MNI that China would not agree with the U.S.'s demands for a

trade surplus reduction. 

     LIQUIDITY: The PBOC skipped OMOs on Monday as the current liquidity

condition is at a "relatively high" level, according to a statement on the

central bank's website. This left liquidity unchanged as no reverse repos

matured today. A total of CNY320 billion in reverse repos will mature this week.

CFETS-ICAP's money-market sentiment index closed at 33 on Friday, slightly down

from 34 on Thursday.

     MONEY MARKET RATES: 7-day repo average dropped to 2.6877% from 2.6962%

Friday, after the PBOC skipped OMO. The overnight repo average decreased to

2.5077% from Friday's 2.5289%.

     YUAN: The yuan fell to 6.3924 against the U.S. dollar from Friday's close

of 6.3760. Earlier today, the PBOC set the yuan central parity rate at 6.3852

Monday, weaker than last Friday's 6.3763.

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

3.6925%, down from the previous close of 2.7050%, according to Wind Information.

     STOCKS: Shares rose in Shanghai, led by environment protection companies,

with Poten Environment Group Co., Ltd. up by the daily-limit 10%. The benchmark

Shanghai Composite Index closed 0.64% higher at 3,213.84. Hong Kong's Hang Seng

Index gained 0.78% to 31,290.82.

     FROM THE PRESS: China Banking and Insurance Regulatory Commission is

amending an interim rule regulating foreign ownership in Chinese commercial

banks, said Chen Wenhui, deputy chairman of the commission, this weekend,

according to China Securities Journal. The commission is also creating detailed

rules on financial asset investment companies and insurance agents, Chen said.

Chen highlighted rules affecting key aspects of China's banking and insurance

sectors: reducing restrictions on foreign investment and on the establishment of

foreign financial institutions in China; expanding business operations of

foreign banks; and improving regulations on foreign banks and investment. Chen

stressed risk controls and the gradual opening up of China's economy and

financial sector.

     Chinese cities should rein in a property bubble while they increasingly

enact policies to attract talent to boost local structural reform and

development, Securities Daily said in a commentary. Drawing in talent into

cities should not be a measure to stimulate the development of the local

property market or to consume excessive housing inventory, the Daily said. In

order to attract talent and make them stay, cities should improve the local

industrial and policy environment to create new economic drivers, the Daily

said. Home purchasers flocked to Tianjin City after the city issued new policies

with lower criteria for defining talent, which caused a new round of property

sales in the city, the newspaper said.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com

--MNI Singapore Bureau; +65 8233 2326; email: Asia-Editor@marketnews.com

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