MNI China Daily Summary: Thursday, July 23

     TOP NEWS: China will consider not recognizing British National (Overseas)

passports as valid travel documents, in response to London's new policy of

allowing Hong Kong residents to claim British citizenship, China's Foreign

Ministry said Thursday that. The UK's new policy is a violation of international

law and interferes with China's internal affairs, said spokesperson Wang Wenbin

at a press conference.

     POLICY: China will push self-employment and part-time or net-based work

arrangements to deal with this year's challenging job market and boost incomes,

a transcript from the State Council executive meeting held on Wednesday said.

The government will also offer entrepreneurship subsidies, guaranteed loans, and

tax incentives to college graduates, migrant workers and the self-employed, and

help develop online retail, education and training, as well as medical care

jobs, the transcript said.

     POLICY: One of China's leading policy banks increased lending to export

businesses by half over last year, helping companies over the worst impacts of

the global slowdown, interrupted supply chains and the dip in domestic demand as

the pandemic spread in the first half of the year, a leading bank official said

Thursday. The Export and Import Bank of China (Exim), one of three big China

policy banks, boosted loans for export firms to CNY904.7 billion in H1, an

increase of around 50% on last year, Wu Fulin, president of The Export and

Import Bank of China (Exim), told a press conference held by China's Banking and

Insurance Regulatory Commission.

     LIQUIDITY: The People's Bank of China (PBOC) injected CNY50 billion via

7-day reverse repos with the rate unchanged on Thursday, offsetting the maturing

CNY50 billion reverse repos and leaving liquidity unchanged, according to Wind

Information. The medium-term lending facilities (MLFs) and targeted MLFs (TMLFs)

maturing today had been rolled over on July 15, so liquidity needs have been

met, PBOC said. MNI record showed the central bank conducted CNY400 billion MLF

in mid-July intended to offset today's maturing CNY200 billion MLF and CNY297.7

billion TMLF.

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

institutions (DR007) rose to 2.1891% from Wednesday's close of 1.9614%, Wind

Information showed. The overnight repo average increased to 1.8487% from the

previous 1.3423%.

     YUAN: The currency strengthened to 6.9921 against the dollar from 7.0059 on

Wednesday. PBOC set the dollar-yuan central parity rate higher at 6.9921,

compared with the 6.9718 set on Wednesday.

     BONDS: The yield on 10-year China Government Bond was last at 2.9050%, up

from the close of 2.8850% on Wednesday, according to Wind Information. 

     STOCKS: The Shanghai Composite Index lost 0.24% to 3,325.11, while the

CSI300 index edged down 0.04% to 4,712.44. Hang Seng Index gained 0.82% to

25,263.00.

     FROM THE PRESS: China should scale back its stimulative monetary policies

now the economy has resumed growth, to prevent some of the historical and

systemic financial issues from further worsening, Yu Lingqu, a researcher at a

state-sponsored think tank China Development Institute, wrote in an article

published on the official portal China.com.cn. The leverage ratio is likely to

rise to a new record after reaching 269.3% from 245.4% through Q1, Yu said

citing data from National Institution for Finance & Development. The real estate

market and the bull run in stocks indicated asset bubbles, and the current

banking and capital structure continues to leave most bank lending out of the

reach of small businesses, Yu said. "We should not be overly optimistic" about

China's finance and economy and must increase measures to prevent financial

risks, Yu wrote.

     China's regulators are stepping up controls to prevent resurging high-risk

shadow banking and declining bank asset quality amid the epidemic, the Economic

Information Daily reported. Authorities have ordered banks and insurance

companies not to lengthen their financing chains, increase financing costs or

bank-trust channels that cause the funds to be used for financial speculation,

the daily said.

     The Shanghai government held a contract-signing ceremony Wednesday to

demonstrate its ability to continue drawing investments and foreign companies'

interests in the China market, the Shanghai Securities News reported. The event

publicized 54 investment projects over USD8 billion, featuring MNCs including

HSBC. Shanghai received $10.3 billion actual investments in H1, up 5.4% from a

year ago, the journal said. About 26 new MNCs established regional headquarters

in Shanghai, along with 10 R&D centers, it said.

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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