MNI China Daily Summary: Monday, November 4

     POLICY: China's core concerns in the ongoing trade conflicts with the U.S.

remain unchanged after a constructive Nov 1 phone call between chief negotiators

from both sides, Taoran Notes, a blog associated with the Economic Daily, said

Saturday. These include the removal of all punitive tariffs, that purchase

commitments must remain the same as what was agreed to at last year's Xi-Trump

G20 summit in Argentina and the agreement must be a "balanced text," it said.

They must be addressed even in a phasic agreement, otherwise some problems won't

be resolved, Taoran Notes wrote.

     POLICY: The Chinese government should extend the same subsidies enjoyed by

domestic companies to foreign firms as well if it were to abide by the

soon-to-be-implemented new Foreign Investment Law, policy advisors said at the

6th China Inbound-Outbound Forum held by the Center for China and Globalization

(CCG) on Saturday. The new regulation, effective 2020, stipulates the

government's supporting policies, including funding, land supply and tax

reductions, shall be applied regardless of nationalities. Under the spirit of

the new law, if the central or local authorities offer subsidy for state-owned

companies, foreign companies should also enjoy the same support, said Cui Fan, a

researcher at the Advisory Committee for Economic and Trade Policy at the

Ministry of Commerce.

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

for the sixth day, leaving liquidity unchanged as no instrument matured,

according to Wind Information. The total liquidity in the banking system is

relatively high, PBOC said.

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

institutions (DR007) decreased to 2.4398% from Friday's close of 2.4986%, Wind

Information showed. The overnight repo average fell to 2.0489% from Friday's

2.2753%.

     YUAN: The yuan strengthened to 7.0302 against the U.S. dollar from Friday's

close of 7.0376. PBOC set the dollar-yuan central parity rate higher at 7.0752,

compared with 7.0668 on Tuesday.

     BONDS: The yield on 10-year China Government Bond was last at 3.2900%, up

from Friday's close of 3.2700%, according to Wind Information. 

     STOCKS: Shanghai Composite Index gained 0.58% to 2,975.49 as technology,

aviation and brokerage shares advanced. Hong Kong's Hang Seng Index rallied

1.65% to 27,547.30.

     FROM THE PRESS: Chinese banks should manage risks of shadow-bank lending by

actively communicating with regulators and dispose of assets with poor liquidity

and long maturity, the Securities Daily reported citing Wang Jingwu, the

director of PBOC's Financial Stability Bureau. The central bank should also

further promote policy reform to guide investors' expectations and increase

supply of long-term funding, the newspaper cited Wang as saying.

     Chinese state-owned enterprises (SOEs) should withdraw from non-core

industries where they don't have competitive advantages, and invest in key areas

related to national security, the real economy and strategically important

emerging industries, the Shanghai Securities Journal reported citing Hao Peng,

the party secretary of the State-owned Assets Supervision and Administration

Commission. SOEs should also expand overseas under the Belt & Road initiative,

and actively integrate into global industry and value chain, the newspaper cited

Hao as saying.

     China can achieve its target importing $30 trillion worth of goods in the

next 15 years, as it has a large market of 1.4 billion people with more than 400

million in middle-income group, the China Business News reported citing

Assistant Minister of Commerce Ren Hongbin. China's imports dropped 0.1% y/y in

the first three quarters mainly due to changing prices of commodities, according

to Ren.

--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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