MNI China Daily Summary: Thursday, March 21

     EXCLUSIVE: A deal between China and the U.S. to resolve their year-long

trade dispute is likely to come by the end of June, although the timing of a

proposed presidential summit to seal an agreement is still unclear, Chinese

trade advisors told MNI. "There's around a 70% chance of a deal in the first

half of the year, and a 30% chance of a deal in the next three to four weeks,"

said Wang Haifeng, director of International Trade and Investment at the Chinese

Academy of Macroeconomic Research, run by the National Development and Reform

Commission.

     POLICY: As it shifts its focus to high-quality growth, China has room to

cut import tariffs on goods such as agricultural produce, but opening its

financial sector to global capital flows must proceed only gradually as more

progress is made towards yuan internationalisation, a senior researcher from a

MOFCOM-affiliated think tank told MNI in an interview. More tariff cuts,

including for industrial components used in key sectors, will likely come

through free-trade agreements, said Zhu Caihua, deputy head of the foreign trade

institute under the Chinese Academy of International Trade and Economic

Cooperation.

     TRADE: U.S. Trade Representative Robert Lighthizer and Treasury Secretary

Steven Mnuchin will visit Beijing on March 28 and 29 for the eighth round of

high-level trade talks with China, the Ministry of Commerce told reporters

today. Following this, Vice Premier Liu He, China's senior trade negotiator,

will travel to Washington in early April for the ninth round of consultations,

MOFCOM spokesman Gao Feng said.

     DATA: China's total outbound direct investment fell 6.9% y/y to $15.66

billion in Jan-Feb 2019, with this total distributed across 1416 foreign

enterprises in 138 countries, data released today by MOFCOM showed. Investment

in 'Belt and Road' countries rose 7% y/y to $2.3 billion, the ministry said.

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

for a second consecutive day, with no reverse repos maturing, according to Wind

Information. The PBOC considers total liquidity in the banking system to be at a

reasonable and ample level.

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

institutions (DR007) increased to 2.7500% from Wednesday's close of 2.7173%,

according to Wind Information. The overnight repo average fell to 2.6600% from

Wednesday's 2.7149%.

     YUAN: The yuan appreciated to 6.6877 against the U.S. dollar from

Wednesday's close of 6.6998. The PBOC set the dollar-yuan central parity rate at

6.6850 today, the strongest level since July 17 2018, following Wednesday's

6.7101.

     BONDS: The yield on the benchmark 10-year China Government Bond was last at

3.1800%, up 1.5bps from Wednesday's close, according to brokers.

     STOCKS: The benchmark Shanghai Composite Index rose 0.35% to 3,101.46. Hong

Kong's Hang Seng Index fell 0.85% to 29,071.56.

     FROM THE PRESS: With the Federal Reserve signalling no further rate hikes

in 2019, the PBOC has greater freedom to implement rate cuts to address domestic

concerns, said Deng Haiqing, chief economist at Wallstreet CN, in a report

published today. Although the prospect of benchmark interest rate cuts remains

uncertain, the PBOC is very likely to lower the reserve requirement ratio in

March and April, Deng added.

     Infrastructure investment is expected to grow by around 7-8% in 2019,

supported by funds from the national budget which could total CNY3.21 trillion,

Luo Ding, chief construction analyst at CITIC Securities said, the Securities

Daily reported today. The government is expected to continue to invest to

improve infrastructure in key areas such as transport and water conservation,

the Daily cited Luo as saying.

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

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

--MNI London Bureau; +44 207-862-7489; email: ukeditorial@marketnews.com

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