MNI China Daily Summary: Thursday, July 25

     TRADE: Officials from China and the U.S. will meet in Shanghai on July 30

to 31 to carry out the 12th round of trade talks, Gao Feng, spokesman of the

Ministry of Commerce confirmed at a briefing today, without disclosing details

of the arrangements. Gao downplayed the fact the talks would be in Shanghai,

noting nothing untoward about not meeting in Beijing, as before. Gao said

Chinese companies which have inquired about importing U.S. agricultural

products, will sign commercial contracts with U.S. exporters and such purchases

should not be directly linked to the trade negotiation, as such moves are

independent decisions by Chinese companies.

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

(OMOs) for a third day today, draining CNY100 billion after the maturity of

reverse repos, according to Wind Information. Banks' RRR adjustments can offset

the maturity of reverse repos, and the total liquidity in the banking system is

reasonable and ample, the PBOC said.

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

institutions (DR007) rose to 2.6350% from Wednesday's close of 2.5301%, Wind

Information showed. The overnight repo average increased to 2.6272% from

Wednesday's 2.4759%.

     YUAN: The yuan weakened to 6.8750 against the dollar from Wednesday's close

of 6.8745. The PBOC set the dollar-yuan central parity rate lower at 6.8737

today, compared with 6.8860 on Wednesday.

     BONDS: The yield on 10-year China Government Bond was last at 3.1625%, down

from the close of 3.1700% on Wednesday, according to Wind Information.

     STOCKS: The benchmark Shanghai Composite Index rose 0.48% to 2,937.36. Hong

Kong's Hang Seng Index increased 0.25% to 28,594.30.

     FROM THE PRESS: The PBOC may cut the reserve requirement ratios in H2 to

boost growth against the backdrop of global rate cuts, the Securities Daily

reported citing Tao Jin, a researcher at Suning Institute of Finance. Liquidity

is expected to remain stable in H2, with no tax and fee collection peaks and

local government bond issuances may be completed before the end of September, so

aggressive easing isn't necessary, Tao was reported as saying by the newspaper.

     Local governments should remove irregular fees for companies to help ease

their burden, and not pass their expenses to businesses, the State Council said

on its website following its weekly meeting yesterday. The meeting also launched

pilot projects to deepen financial reforms and promote the opening up of the

financial service sector.

     China's economy is generally stable, resilient, with great potential and

can support the long-term stability of the yuan exchange rate, the Economic

Daily said in a commentary. Deepening reform and opening up will help stabilize

the FX market and allow macroeconomic policies to support the yuan, the

newspaper said, adding that the international market is also optimistic about

China's economy.

--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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