MNI China Daily Summary: Thursday, February 27

     BEIJING (MNI) - EXCLUSIVE: The People's Bank of China (PBOC) will boost the

flow of credit to small- and medium-sized companies struggling with the impact

of coronavirus using tools including targeted cuts to reserve requirements and

an increase in its pledged supplementary lending programme, which provides cheap

funds to banks which must then lend them on to specific sectors, policy advisors

told MNI.

     POLICY: The PBOC will cut the reserve requirement ratios for targeted banks

to boost support to SMEs heavily impacted by the epidemic at the proper time,

Deputy Governor Liu Guoqiang said Thursday.

     POLICY: China will give priority to resuming production at leading foreign

manufacturers to help ease the coronavirus impact on global supply chains,

particularly those in the auto and electronics sectors, said Zong Changqing,

head of the Foreign Investment Department at a Ministry of Commerce said today.

     LIQUIDITY: The PBOC skipped open market operations for the eighth day,

leaving liquidity unchanged, according to Wind Information. Total liquidity in

the banking system is at a reasonable and ample level, PBOC said on its website.

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

institutions (DR007) rose to 2.1435% from Wednesday close 2.0632%, data by Wind

Information showed. The overnight repo average decreased to 1.3218% from

Wednesday's 1.4751%.

     YUAN: The currency strengthened to 7.0161 against the dollar from

Wednesday's 7.0170 close. PBOC set the dollar-yuan central parity rate higher at

7.0215, compared with 7.0126 on Wednesday.

     BONDS: The yield on 10-year China Government Bonds was last at 2.8000%,

down from Wednesday's close of 2.8250%, according to Wind Information.

     STOCKS: The Shanghai Composite Index gained 0.11% to 2,991.33. Hong Kong's

Hang Seng Index edged up 0.31% to 26,778.62.

     FROM THE PRESS: Infrastructure projects valued at more than CNY10 trillion

have been approved or commenced construction in the past two weeks, the Shanghai

Securities Journal reported. Five provincial governments, including Beijing,

recently announced 2020 investment plans with a focus on infrastructure projects

totalling over CNY11 trillion, the journal said. 

     It is more feasible for China to expand the scale of local government

special bond issuance rather than issue special China Government Bonds (CGBs),

according to a commentary in Securities Times. The procedures for issuing

special CGBs are relatively complicated, requiring reviews and approvals by the

National People's Congress, and these bonds could further raise the

deficit-to-GDP ratio. Special bonds issued by local governments are not included

in the calculation of the deficit rate, the commentary said. 

     China's imports and exports will rebound strongly after the coronavirus

epidemic and the annual growth rate for foreign trade is expected to reach

around 5%, the China News Service reported citing Wei Jianguo, former vice

minister of Commerce. Small and medium-sized exporters should be encouraged to

concentrate labour, raw materials, and transportation resources to produce

collaboratively and avoid losing orders and markets, the newspaper cited Wei as

saying.

--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

[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]