MNI China Daily Summary: Thursday, February 28

     POLICY: Boosting consumption is crucial to reversing the slowing economy,

said Shen Jianguang, chief economist at JD Finance in a note sent to MNI. Using

financial subsidies as a stimulus is limited by the government's reduced

revenues due to tax cuts, and it is also less effective, Shen said.

     DATA: Manufacturing PMI dropped to 49.2 in February from 49.5 last month,

missing the forecast of 49.4 in an MNI survey, data released by the National

Bureau of Statistics (NBS) today showed. The index fell to the lowest level

since March 2016 and has been in contraction for three months. Demand is however

picking up and producers are more confident that business will improve, the NBS

said.

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

operations, leaving liquidity unchanged as no reverse repos mature, according to

Wind Information. The total liquidity in the banking system is relatively high,

said the PBOC.

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

institutions (DR007) decreased to 2.6500% from Wednesday's close of 2.8030%,

according to Wind Information. The overnight repo average fell to 2.5700% from

Wednesday's 2.6393%.

     YUAN: The yuan depreciated to 6.6868 against the U.S. dollar from

Wednesday's close of 6.6835. The PBOC set the dollar-yuan central parity rate

weaker for the first time in eight trading days at 6.6901 today, compared with

6.6857 set on Wednesday.

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

3.1700%, up 0.5 bps from the close of Wednesday, according to brokers.

     STOCKS: The benchmark Shanghai Composite Index declined 0.44% to 2,940.95.

Hong Kong's Hang Seng Index decreased 0.43% to 28,633.18.

     FROM THE PRESS: The PBOC will strengthen real-time monitoring of the stock,

bond and foreign exchange markets as it looks to limit systemic financial risk,

Financial News said citing Wang Jingwu, head of the Financial Stability Bureau

at the PBOC. Wang warned the impact of rising local government debt and bond

defaults on the financial system, and also said the real estate market could

pose financial risks.

     The new chairman of the China Securities Regulatory Commission has

indicated his focus is on capital market reform, according to a front-page

commentary in the Securities Daily today. In his first press conference, the

newly appointed Yi Huiman was reported as endorsing marketisation of capital

markets to drive reform.

     Shadow banking and asset management by financial institutions are the

focused areas tackling systemic financial risks, the PBOC said on its website

late Wednesday, vowing to improve its policies.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

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