MNI China Daily Summary: Thursday, March 12

     BEIJING (MNI) - POLICY: China will support its companies exporting medical

supplies such as masks, despite a domestic shortage, and help countries and

regions severely affected by the coronavirus outbreak, Li Xingqian, the director

of foreign trade at the Ministry of Commerce, said in an online weekly briefing

on Thursday. China will share experience of epidemic prevention and control, Li

said.

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

for the 18th day, leaving liquidity unchanged, according to Wind Information.

Liquidity in the banking system is reasonable and ample, PBOC said on its

website.

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

institutions (DR007) fell to 2.1598% from Wednesday's close 2.2385%, data by

Wind Information showed. The overnight repo average decreased to 1.6594% from

the previous 2.0967%.

     YUAN: The currency weakened to 6.9840 against the dollar from Wednesday's

6.9499 close. PBOC set the dollar-yuan central parity rate higher for a third

trading day at 6.9641, compared with Wednesday's 6.9612.

     BONDS: The yield on 10-year China Government Bonds was last at 2.6375%, up

from Wednesday's close of 2.6150%, according to Wind Information.

     STOCKS: The Shanghai Composite Index tumbled 1.52% to 2,923.49, tracking

losses in other markets after the WTO declared COVID-19 a global pandemic. Hong

Kong's Hang Seng Index lost 3.66% to 24,309.07.

     FROM THE PRESS: China should quicken the cuts to targeted reserve

requirement ratios (RRR) for banks, especially joint-stock banks, enabling

commercial banks to increase lending for small companies, cut financing costs

and help the resumption of production, according to a statement following the

State Council executive meeting on Wednesday night. China will promote a tax

rebate for export products and guide financial institutions to increase lending

to trade companies, the government said. China will also take measures including

increasing cargo flights to smooth global supply chains, the government said.

     China should spend limited resources on stabilizing employment and

supporting small-and-medium enterprises after the epidemic instead of

large-scale infrastructure investment, Caixin reported citing Ma Jun, a member

of the PBOC's monetary policy committee. Though infrastructure investment can

make GDP grow faster, such growth is less significant to people's livelihood

than others such as boosting employment, Ma said. SMEs, which employ hundreds of

millions, face financial difficulties in the first half, and large-scale layoffs

by this sector may lead to serious social problems, Ma told Caixin. There are

also 8 million new college graduates looking for jobs in the summer, and many

that normally do the hiring have planned to scale back, Ma said.

     China is expected to finance up to CNY3 trillion this year in high-tech

infrastructure initiatives including 5G and high voltage electricity

transmission, the Securities Daily reported citing Liu Xiangdong, deputy

director of Research Department under the China Center for International

Economic Exchange. Building "new infrastructure" is an important measure to

stabilize investment, and there is huge potential demand for these projects

which can also attract social capital, the newspaper said.

     The PBOC and the China Securities Regulatory Commission will provide a

better policy environment to support bond issuance by private companies, the

Shanghai Securities Journal reported. The authorities will also strengthen the

monitoring and early warning of default risks, and improve the market-based

approach to handling defaults, the newspaper 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

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