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Free AccessMNI China Daily Summary: Thursday, May 14
EXCLUSIVE: China may propose extending the implementation period of its
Phase 1 trade agreement with the U.S. or cite force majeure to reduce promises
for purchases of American goods, but Beijing wants to keep the deal if possible
despite a report in a state-run newspaper that some officials were unhappy with
it, advisors and sources close to the government told MNI.
Australia could find its barley exports to China effectively banned for up
to five years as Beijing considers imposing anti-dumping tariffs, with Canberra
caught in the crossfire between China and the U.S. tensions, sources close to
the Chinese government told MNI.
POLICY: China will overcome any difficulties and push to fulfil the
Phase-One agreement with the U.S., a senior advisor to the Chinese government
told reporters on Thursday."The China-U.S. Phase One agreement was negotiated
with a huge amount of time and energy: it is of great importance and it benefits
both China and the U.S., as well as the world economy," said Ruan Zongze, vice
president of China Institute of International Studies (CIIS), and a former
diplomat to the U.S.
China's foreign trade faces continued downward pressures, especially for
small and medium-sized companies and labor-intensive industries amid the
economic impact of the coronavirus, said Commerce Ministry Spokesman Gao Feng,
when asked at a briefing if the rebound of April export would continue. China's
April export growth was supported by the accelerated resumption of domestic
production capacity, as well as the relatively fast recovery of market demand in
Japan and South Korea and the generally stable ASEAN market, said Gao. Exports
to "Belt and Road" countries still have great potential despite shipping and
supply chain disruptions in the short-term, Gao added.
China will increase its macro-policy efforts to overcome the impact of the
coronavirus, with a more proactive fiscal effort and flexible monetary policy,
wrote He Lifeng, director of the National Development and Reform Commission in
an article published on the NDRC website late Wednesday.
China will fund a boost in investment through selling special central
government bonds and local government debt and raising the deficit to meet
fiscal demand, Minister of Finance Liu Kun wrote in a commentary published by
the People's Daily. This appeared to be the government's first open
acknowledgement how it will use the money raised by Special China Government
Bonds this year, MNI noted.
LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations
for the 12th day, net draining CNY200 bln as a same amount of Medium-term
Lending Facility (MLF) matured today, according to Wind Information. Liquidity
in the banking system is reasonable and ample, the PBOC said on its website.
DATA: Foreign direct investment (FDI) into China totalled $10.14 billion in
April, a rise of 8.6% y/y, due to a batch of key foreign-invested projects
signed and landed, as well as a low base in the same period last year, the
Ministry of Commerce said. FDI into China for the first four months fell 8.4%
y/y to $41.34 billion.
RATES: The seven-day weighted average interbank repo rate for depository
institutions (DR007) decreased to 1.1000% from Wednesday's close 1.2583%, Wind
Information showed. Overnight repo average rose to 0.7484% from 0.6832%
yesterday.
YUAN: The yuan weakened to 7.0948 against the dollar from Wednesday's close
7.0937. PBOC set the dollar-yuan central parity rate higher at 7.0948, up from
the 7.0875 set on Tuesday.
BONDS: The yield on 10-year China Government Bonds was last at 2.5300%, up
from Wednesday's close of 2.5291%, according to Wind Information.
STOCKS: The Shanghai Composite Index lost 0.96% to 2,870.34. Hong Kong's
Hang Seng Index lost 1.45% to 23829.74.
FROM THE PRESS: The Q1 rise in China's macro leverage ratio was a positive
sign of the resumption of the economy rather than a warning to cut back on
stimulus in a challenging period, the Securities Times said in a commentary.
The macro leverage ratio rose by 13.9 percentage points in Q1, more than twice
the increase for all of 2019. The government has shifted its view on the ratio
as the economic situation changes and the goal has been shifted from
"stabilizing the leverage" at three years ago to the current "leveraging", the
Times added.
China is preparing to punish U.S. congressmen, Missouri State and others
for "cooking up anti-China acts", according to Global Times citing unnamed
sources close to the Chinese government. Global Times said that, for some of
these people, being anti-China has become part of their daily routine.
--MNI Beijing Bureau; +86 (10) 8532-5998; email: archie.zhang@marketnews.com
--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]
To read the full story
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.