MNI China Daily Summary: Thursday, February 14

     EXCLUSIVE: China and the U.S. may reach a deal to partially resolve their

trade dispute before the end of a 90-day negotiating period, advisors to the

Chinese government told MNI, although they were divided whether the March 1

deadline would be extended. An agreement won't have to wait for a meeting

between presidents Donald Trump and Xi Jinping, advisors said, after Trump told

reporters Feb 7 that he would not see his Chinese counterpart before the

deadline.

     DATA: China's exports in January rose 9.1% y/y to USD217.57 billion,

beating the -2.0% forecast by an MNI survey of economists, following a 4.4% drop

in December. Imports were down 1.5% y/y compared with last month's -7.6% y/y,

better than -10.5% survey projection. Trade surplus narrowed to USD39.16 billion

from USD57.06 billion in December, the smallest in three months. Exports to the

U.S. fell 2.8% y/y, while imports from the U.S. fell the most ever, by 41.1%

y/y.

     DATA: Foreign direct investment (FDI) into China in January rose 2.8% y/y

to USD12.41 billion, data by the Ministry of Commerce today showed. That

compared with 23.2% y/y gain to USD13.71 billion in December. FDI into Chinese

high-tech industries had the largest gain of 40.9% y/y, with high-tech services

receiving 113.4% y/y more investment.

     TRADE: China's vice premier and senior trade negotiator Liu He co-chaired

the opening ceremony of the Sino-US high-level economic and trade consultation

with the U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary

Steven Mnuchin today, Xinhua News Agency reported. Talks will be held in Beijing

on Thursday and Friday.

     POLICY: China will encourage foreign investors to park their money in the

area of agriculture, high technology and modern services, said Gao Feng, the

spokesman of the Ministry of Commerce at a presser in Beijing today. All the

industries encouraged to invest in will be included in the drafted investment

directory, now seeking public consultation, Gao added.

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

(OMO) for a fourth day, draining CNY200 billion as that amount of reverse repos

matured, according to Wind Information. The PBOC said the total liquidity in the

banking system is currently at a relatively high level, enough to offset cash

withdrawals, maturing of reverse repos and other factors.

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

institutions (DR007) decreased to 2.1883% from Wednesday's close of 2.2080%,

according to Wind Information. The overnight repo average rose to 1.7098% from

Wednesday's 1.6964%.

     YUAN: The yuan depreciated to 6.7701 against the U.S. dollar from

Wednesday's close of 6.7596. The PBOC set the dollar-yuan central parity rate at

6.7744 today, weaker than the 6.7675 set on Wednesday.

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

3.10%, up from Wednesday's closing of 3.09%, according to brokers.

     STOCKS: The benchmark Shanghai Composite Index closed 0.05% lower at

2,719.70. Hong Kong's Hang Seng Index decreased 0.23% to 28,432.05.

     FROM THE PRESS: The U.S. appears more willing to reach an agreement with

China, as their high-ranking negotiators in Beijing as well as the U.S.

financial market reaction all have shown optimism about reaching a trade deal,

the Global Times said in an editorial late Wednesday. 

     China's economy is expected to bottom out in Q3 2019, the Economic

Information Daily said in a commentary. Although the Chinese economy still faces

many uncertainties, such as weak exports, slowing property investment and sales,

they were accounted for in policymaking so won't create another shock, the

newspaper said.

     The financial markets expect the PBOC to issue more large-scale central

bank bills overseas on a more regular basis, the Shanghai Securities News said

citing analysts. Issuing offshore bills more often will help convey the central

bank's policy intentions, the newspaper said citing Ming Ming, an analyst at

Citic Securities.  

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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