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     TOPS NEWS: China is ready for the escalations in trade conflicts with the
U.S. and will further respond if the U.S. sticks to the "wrong path," Gao Feng,
spokesman of the Ministry of Commerce said in Beijing Thursday. Gao said the two
sides have not started bilateral formal negotiations. 
     DATA: Chinese banks were net sellers of FX to clients in March, reflecting
the relatively balanced cross-border capital flows, according to data release by
the State Administration of Foreign Exchange on Thursday. Banks sold net CNY16.5
billion to clients in March, compared with net sales of CNY10 billion in
February. Outstanding FX reserves was USD3.14 trillion on March 31, an increase
of USD8.3 billion from February, PBOC data show.
     ANALYSIS: China's property market is heating up again -- and this time it
is clearly supported by both sides of the equation: rising demand and shrinking
supply. New home prices gained 0.4% on a monthly basis, 0.2 percentage point
faster than the pace of gain in February, with 55 out of the 70 surveyed cities
or 79% of the medium and large cities experiencing month-on-month price gains,
MNI calculations showed. Despite China's much-touted two-year campaign to tame
housing bubbles, relatively strong performance of the property market shows the
momentum has only been pent up and further gains in prices seems inevitable.
     LIQUIDITY: The PBOC injected CNY190 billion by 7-day reverse repos on
Thursday, resulted in a net injection of CNY190 billion as no reverse repos
matured today. CFETS-ICAP's money-market sentiment index closed at 63 on
Wednesday, up from 58 on Tuesday. 
     MONEY MARKET RATES: 7-day repo average dropped to 2.9171% from 2.9831%
Wednesday, after PBOC injected CNY190 billion by OMO. PBOC also reduced reserve
requirement ratio for most commercial banks by 1 percentage point on Wednesday.
The overnight repo average rose to 2.7825% from Wednesday's 2.7216%. 
     YUAN: The yuan strengthened to 6.2710 against the U.S. dollar, compared
with the official closing price of 6.2854 yesterday. PBOC on Thursday set the
yuan central parity rate at 6.2832, weaker than Wednesday's 6.2817, the second
consecutive trading day that the central bank has set a weaker fixing.
     BONDS: The yield on benchmark 10-year China Government Bond was last at
3.5000%, up from the previous close of 3.4900%, according to Wind Information. 
     STOCKS: Shares rose in Shanghai, led by aluminum producer gains on the
market's worries that the U.S. sanctions on Russian metals reduce supply, with
Aluminum Corporation of China gaining 6.5%. The benchmark Shanghai Composite
Index rose 0.84% to 3,117.38. Hong Kong's Hang Seng Index gained 1.20% to
     FROM THE PRESS: The U.S.'s trade sanction preventing the sale of chips to
ZTE for seven years will be a big opportunity for the domestic chip industry,
the People's Daily said. China will likely increase its research on chips at all
costs, and the chip industry will see historical growth, noted the Daily, citing
an anonymous investor. Independent research will not be against opening up, and
China will continue to seek collaborations with international researchers and
companies, the Daily remarked.
     The government has met 70% of its target to cut tax by a trillion yuan this
year, a one month after the National People's Congress, Shanghai Securities News
reported. It focused efforts on the manufacturing, communications, building and
high-tech manufacturing sectors, as well as other emerging industries of
strategic importance, noted the paper.
     Multiple Chinese provinces have assured that they will meet their target of
closing "zombie companies" in 2018, indicating that the state-owned zombie
companies settlement has been progressing rapidly, reported Economic Information
Daily. In the medium-to-long term, SOE reform and the closing of zombie
companies will support the progress of interest rate liberalization, the report
--MNI Beijing Bureau; +86 (10) 8532-5998; email:
--MNI Beijing Bureau; +86 10 8532 5998; email:
[TOPICS: MAQDS$,M$A$$$,M$Q$$$,MI$$$$,MBQ$$$]

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