MNI China Daily Summary: Thursday, July 4

     TRADE: The U.S. must remove all the additional tariffs levied on Chinese

goods since the trade war commenced before an agreement can be reached in

further trade talks, said Gao Feng, the spokesman of Ministry of Commerce, at a

briefing today. Gao reiterated China's clear stance on removing additional

tariffs, criticizing that the U.S. tariff hikes have damaged the interest of

American companies and consumers, and dampened the world economy.

     POLICY: Central banks should play a more active role in promoting green

finance, according to Ma Jun, a member of the People's Bank of China (PBOC)

Monetary Policy Committee and Chair of Supervision Workstream of NGFS, the

Central Banks and Supervisors Network for Greening the Financial System. "Green

'QE' is an interesting idea for central banks to support the green finance

market" Ma told MNI in the second part of an exclusive interview. "The PBOC

initiated the green re-lending program that provides low-cost funds for

commercial banks to lend to green projects since 2017, which, to some extent,

resembles Green QE in terms of its role in reducing costs of green funding,"

said Ma, who is also Chairman of the Green Finance Committee of China Society

for Finance and Banking, an industrial association set up by the PBOC to promote

green finance.

     LIQUIDITY: The PBOC skipped open market operations (OMOs) for a ninth

straight day, resulting in a net drain of CNY30 billion as that amount of

reverse repos matured, according to Wind Information. Total liquidity in the

banking system is at a relatively high level, enough to offset the maturity of

reverse repos and government bond issuance, according to the PBOC.

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

institutions (DR007) fell to 1.9751% from Wednesday's close of 2.0567%, Wind

Information showed. The overnight repo average decreased to 0.8431% from

Wednesday's 0.8623%.

     YUAN: The yuan strengthened to 6.8701 against the dollar from Wednesday's

close of 6.8833. The PBOC set the dollar-yuan central parity rate weaker at

6.8705 today, compared with 6.8640 set on Wednesday.  

     BONDS: The yield on 10-year China Government Bond was last at 3.1450%, down

from the close of 3.1600 on Wednesday, according to Wind Information.

     STOCKS: The benchmark Shanghai Composite Index decreased 0.33% to 3,005.25.

Hong Kong's Hang Seng Index edged down 0.21% to 28,795.77.

     FROM THE PRESS: Local governments will give more authority to free trade

pilot zones in granting approvals for investment and market access, China's

State Council executive meeting announced on Wednesday. According to a statement

on the government website, China is planning to add a new batch of cross-border

e-commerce pilot zones in addition to the 35 zones which have already been

established.

     China is planning new policies to promote clusters for advanced

manufacturing, according to a report in the Economic Information Daily today.

The newspaper said the clusters would focus on emerging industries and

technologies such as artificial intelligence, integrated circuits, and new

energy vehicles. Smart manufacturing in China is expected to attract significant

foreign investment, according to the report.

     Liquidity injections by the PBOC in June have ensured high levels of

liquidity in the Chinese banking system, with overnight repurchase rates

dropping below a record low of 0.72% this week, Securities Daily reported today.

Citing Tao Jin, a researcher at Suning Institute of Finance, the newspaper said

the PBOC may further liberalise interest rates - and in particular lending rates

- this year. Tao said that liquidity would flow faster from the banking system

to the real economy, and the conduction time will be further shortened to 2 to 3

months from the previous two quarters, the daily reported.

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

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