MNI China Daily Summary: Thursday, April 16

     BEIJING (MNI) - EXCLUSIVE: Regional Chinese banks are calling for state

loan guarantees to be strengthened if they are to comply with regulatory

pressure to boost lending to smaller companies whose business and credit quality

were often already weak even before they were more severely impaired by the

coronavirus epidemic, bankers and advisors told MNI.

     REALITY CHECK: China's retail sales growth looks set to improve from the

historic decline seen in the first two months of the year, although any rebound

could be limited until there is a wider reopening of restaurants and car sales

reignite, according to MNI's latest Reality Check. Although better than the

previous period, overall sales may remain in negative territory in March, as

measures to slow the spread of the coronavirus were partially rolled off through

the month.

     POLICY: China's Ministry of Commerce (MOFCOM) said the current coronavirus

crisis won't weaken its position in the global supply chain nor has it caused

large withdrawals of foreign capital. "The current global supply chain is the

result of joint efforts and choices made by enterprises from various countries

over the years, and no one nor any country can change it at will," spokesman Gao

Feng said today when asked to comment on the U.S. and Japan encourage companies

to move out of China.

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

operations, leaving liquidity unchanged, according to Wind Information.

Liquidity in the banking system is reasonable and ample, the PBOC said on its

website.

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

institutions (DR007) fell to 1.2300% from Wednesday's close 1.2405%, data by

Wind Information showed. The overnight repo average decreased to 0.6876% from

the previous 0.7775%.

     YUAN: The currency weakened to 7.0745 against the dollar from Wednesday's

7.0617 close. PBOC set the dollar-yuan central parity rate higher at 7.0714,

compared with 7.0402 set on Wednesday, the biggest daily fall since March 31.

     BONDS: The yield on 10-year China Government Bonds was last at 2.5050%,

down from Wednesday's close of 2.5300%, according to Wind Information.

     STOCKS: The Shanghai Composite Index gained 0.31% to 2,819.94. Hong Kong's

Hang Seng Index lost 0.58% to 24,006.45.

     FROM THE PRESS: The Chinese government will shift its focus from monetary

to fiscal policies, including issuing Special Government Bonds and increasing

the target fiscal deficit ratio as previously promised, the China Securities

Journal reported citing Yan Se, chief economist with Founder Securities. Q1 data

showed that every CNY100 billion in long-term liquidity released by the central

bank translated into CNY350 billion in loans, and this indicated that the money

hasn't been trapped in the money market and the transmission for monetary policy

isn't obstructed, the newspaper said citing Zhang Xu, chief fixed-income analyst

with Everbright Securities.

     China should intensify its countercyclical adjustments as the coronavirus

pandemic threatens global financial markets and economy, according to a

statement on the government website following the meeting of the Financial

Stability and Development Committee late Wednesday. China should stabilize both

supply and demand sides of the economy with quantity and structural tools, and

implement measures to support private and small companies, the statement read.

     China will build 78,000 electric-vehicle charging stations in 24 provinces

including Beijing, Jiangsu, Hunan and Qinghai this year, boosting purchases of

electric vehicles by CNY20 billion, the Securities Daily reported citing the

State Grid Corp. of China.

--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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