MNI China Daily Summary: Thursday, June 4

     EXCLUSIVE: Chinese soybean buyers are still placing orders with U.S.

suppliers and will continue to do so, despite reports Beijing had ordered a halt

to purchases in an escalation of trade tensions with Washington, sources have

told MNI. Traders, including at state-owned firms, have been given assurances

that shipments will continue to receive exemptions from tariffs imposed during

the drawn-out trade dispute between one of the world's largest soybean producers

and the largest buyer.

     POLICY: China opposes U.S. interference in Hong Kong affairs and supports

the autonomous region's status as a separate customs zone and will consolidate

its leading position in international finance, trade and shipping, Gao Feng,

spokesman for the Ministry of Commerce said Thursday. The U.S. is violating WTO

rules if it disregards international norms and adopts unilateral measures based

on its own domestic law, Gao said when asked to comment on U.S. threats to

revoke Hong Kong's special trade status.

     LIQUIDITY: The People's Bank of China (PBOC) injected CNY70 billion via

7-day reverse repos with the rate unchanged at 2.2%. This resulted in a net

drain of CNY170 billion given the maturity of CNY240 billion of reverse repos,

according to Wind Information. The operation aims to offset the maturity of

reverse repos and the impact of government bond issuances, the PBOC said in a

statement on its website.

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

institutions (DR007) increased to 1.9819% from Wednesday's close 1.9597%, Wind

Information showed. Overnight repo average rose to 1.9323% from 1.8589%

yesterday. 

     YUAN: The yuan weakened to 7.1230 against the dollar from Wednesday's close

7.1099. PBOC set the dollar-yuan central parity rate lower for a fourth day at

7.1012, compared with the 7.1074 set on Wednesday.

     BONDS: The yield on 10-year China Government Bonds was last at 2.8350%, up

from Wednesday's close of 2.7900%, according to Wind Information.

     STOCKS: The Shanghai Composite Index fell 0.14% to 2919.25. Hong Kong's

Hang Seng Index rose 0.17% to 24,366.30. 

     FROM THE PRESS: China has no desire to practice "one country, one system"

in Hong Kong and is not threatened by U.S. sanctions, the Global Times said in

an editorial. The city will stay prosperous with support from the mainland

despite short-term turbulence, it said. Hong Kong will be suffocated if it

becomes the flashpoint of strategic competitions between China and the U.S., the

Times said.

     China's aviation authority said it will allow all foreign carriers to

operate one flight per week to China starting June 8, hours after the U.S.

government threatened to block Chinese airlines from flying into the U.S. in

response to a Chinese policy it said prevented United Airlines and Delta Air

Lines from resuming the trans-oceanic flights. Those airlines had asked to

resume service on June 1. The Chinese authority said all carriers are subject to

its strict requirement that may suspend carriers' services if more than 10

passengers test positive on a flight. 

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

--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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