MNI China Daily Summary: Thursday, January 24

     TOP NEWS: Base effects and U.S. tariffs will cause Chinese trade data to

remain sluggish during the first six months of 2019, after December saw the

sharpest fall in exports in two years and as difficult talks continue with the

U.S., a government advisor told MNI. Previous high levels of trade growth are

looking unsustainable, said Chen Fengying, a researcher at the China Institutes

of Contemporary International Relations and an advisor to the government on

China-U.S. Strategic and Economic Dialogue, noting that the world's

second-largest economy will slow in the first six months of this year, while the

second half could see some improvement.

     TRADE WAR: China and U.S. teams of negotiators maintain close

communications on economic and trade consultations, said Gao Feng, the spokesman

of the Ministry of Commerce at a presser in Beijing today. Gao said a media

report about the U.S. cancelling a scheduled meeting with China this week isn't

true.

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

(OMOs) for a fourth day, resulting in a net drain of CNY250 billion, which is

the total of reverse repos maturing today, according to Wind. The central bank

said the total liquidity within the banking system is reasonable and ample after

CNY100 billion treasury's cash deposit into commercial banks.

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

institutions (DR007) increased to 2.5715% from Wednesday's close of 2.5363%,

according to Wind Information. The overnight repo average increased to 2.2651%

from Wednesday's 2.2455%.

     YUAN: The yuan depreciated to 6.7945 against the U.S. dollar from

Wednesday's close of 6.7888. The PBOC set the yuan's central parity rate at

6.7802 from 6.7969 on Wednesday.

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

3.1450%, up from Wednesday's closing 3.1400%, according to Wind Information.

     STOCKS: The benchmark Shanghai Composite Index closed 0.41% higher at

2,591.69. Hong Kong's Hang Seng Index increased 0.42% to 27,120.98.

     FROM THE PRESS: Investment in new technologies such as 5G networks,

high-speed and intercity rail, electric vehicle charging stations and artificial

intelligence may total CNY4 trillion in the next three years, the Securities

Daily reported today, citing Guo Xiaobei of the China Mingsheng Bank research

institute. Dubbed "new infrastructure," the new industries will help boost

growth and restructure the economy, the Daily said.

     China will introduce a plan soon to promote the development of the services

industry, the Economic Information Daily reported today citing unspecified

sources. The new plan will state a detailed evaluation system and support

artificial intelligence, health and social services, the newspaper said. The

market size of the service sector is estimated to exceed CNY50 trillion by 2020,

the Daily said.

     China's fiscal revenue growth may decline given the slowing economy, Ming

Ming, chief analyst at CITIC Securities, wrote in an article. Slowing

production, falling prices of industrial products will erode corporate profits,

reduce VAT and business income taxes, Ming said. Implementing cuts to taxes and

fees will also shrink state coffers, Ming added.

--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

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