MNI China Daily Summary: Tuesday, Sep 1

POLICY: China's National Development and Reform Commission told senior executives from American companies that the government wants relations with the U.S. back on a track of cooperation and stability, a statement on the planner's website said Tuesday.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY20 billion via 7-day reverse repos with the rate unchanged at 2.2% on Tuesday. This resulted in a net drain of CNY230 billion given the maturity of CNY250 billion of reverse repos, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 2.1948% from Monday's close of 2.2468%, Wind Information showed. The overnight repo average increased to 2.1036% from the previous 1.7943%.

YUAN: The currency strengthened to 6.8239 against the dollar from 6.8535 on Monday. The PBOC set the dollar-yuan central parity rate lower for a sixth day at 6.8498, compared with Monday's 6.8605.

BONDS: The yield on 10-year China Government Bond was last at 3.0450%, up from the close of 3.0150% on Monday, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.44% to 3,410.61, while the CSI300 index increased 0.54% to 4,842.12. Hang Seng Index slightly increased 0.03% to 25184.85.

FROM THE PRESS: The yuan is likely to maintain strength at around 6.9 against the dollar due to the weakness of the dollar index, the Securities Daily reported citing Cao Yuanyuan, a research director at Golden Credit Rating. China's increasing financial openness and stable monetary policies improve the yuan's perceived safety and returns, which in turn attract capital inflow, Wang Youxin, a researcher from BOC's research institution told the Daily.

Rising bad loans were largely responsible for profit falls at Chinese banks this year, according to a commentary in the Economic Daily. Bad loan provisions for commercial banks were at CNY5 trillion at the end of Q2, up CNY206 billion from Q1, the Daily said. The central government's push for banks to lower costs for client companies were offset with central bank measures, and therefore didn't contribute significantly to banks' reduced profits, the Daily said.

China's Communist Party Politburo has urged governments to devise plans for improving the protection of the environment and also development along the Yellow River tributary, according to minutes from a Monday meeting chaired by Chairman Xi Jinping released by Xinhua News Agency. Striving for these outcomes was within the 14th Five Year Plan, the minutes said.