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     TOP NEWS: The yuan-denominated Chinese government bonds and policy bank
bonds will be included in the Bloomberg Barclays Global Aggregate Index. The
inclusion will begin in April and continue over a 20-month period, Bloomberg
said. The People's Bank of China(PBOC) said in a statement on its website that
it fully reflects the confidence of international investors in the Chinese
economy, and shows new progress in the opening up of China's financial market,
which will better meet the needs of allocating yuan assets. The PBOC will
continue to improve relevant rules and arrangements, it said.
     DATA: Manufacturing PMI rebounded modestly to 49.5 in January after four
months of decline, beating the forecast of 49.2 in an MNI survey and recovering
from the 49.4 in December, data released by the National Bureau of Statistics
showed. The index remained in contraction, or below the 50 breakeven mark.
Non-manufacturing PMI jumped to 54.7 from 53.8 in December, indicating that the
overall expansion of the sector has accelerated.
     LIQUIDITY: The PBOC injected CNY50 billion via 14-day reverse repos for a
second day, resulting in a net injection of CNY50 billion as no reverse repos
matured today, according to Wind Information. The PBOC said today's OMO is to
maintain overall liquidity reasonable and ample.
     RATE: The 7-day weighted average interbank repo average rate for depository
institutions (DR007) decreased to 2.7014% from Wednesday's close of 2.7467%,
according to Wind Information. The overnight repo average increased to 2.2290%
from Wednesday's 1.9741%.
     YUAN: The yuan appreciated to 6.7055 against the U.S. dollar from
Wednesday's close of 6.7131. The PBOC set the yuan's central parity rate at
6.7025, compared with the 6.7343 on Wednesday.
     BONDS: The yield on the benchmark 10-year China Government Bond was last at
3.1150%, down from Wednesday's closing 3.1200%, according to Wind Information.
     STOCKS: The benchmark Shanghai Composite Index closed 0.35% higher at
2,584.57. Hong Kong's Hang Seng Index increased 1.08% to 27,942.47.
     FROM THE PRESS: Newly issued local government bonds should be used to first
repay arrears, and wage arrears of migrant workers must be cleaned before the
Chinese New Year, Premier Li Keqiang told a State Council executive meeting on
Wednesday, urging local governments and large state-owned enterprises to repay
the arrears to private and small enterprises, People's Daily reported today. At
present, the government and SOEs have settled accounts of more than CNY160
billion, the newspaper said.
     The scale of new credit in January may exceed CNY3 trillion, boosted by a
number of policies introduced to support credit expansion, along with the PBOC's
intention to keep liquidity ample over the Chinese New Year, said Securities
Daily today citing analysts. Some analysts, including Zhang Jun, chief economist
at Morgan Stanley Huaxin Securities, are concerned that credit growth may not be
maintained due to lower appetite of consumers and companies for risks, the Daily
said.
     The State Administration of Foreign Exchange (SAFE) is looking to deepen
reform of China's FX market to better meet consumers' and companies' need to
hedge, said China Forex, a magazine run by SAFT late Wednesday citing the
spokeswoman Wang Chunying. The measures may be introducing new trading tools,
boosting liquidity, opening up to more market players, improving market
infrastructure and strengthen international competitiveness, Wang said. 
--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$$$]