MNI China Daily Summary: Thursday, May 17

     TOPS NEWS: China will not compromise on its core interests for a solution

in the trade talks with the U.S., Ministry of Commerce said Thursday at a press

briefing. As Chinese Vice Premier Liu He leads Chinese officials to discuss

trade with U.S. counterparts in Washington, Gao Feng, spokesman of the ministry,

said China will firmly defend its interest, and it continues to urge the U.S. to

end the 301 investigation. China has already prepared for all possible outcomes

of the trade talks, said Gao. China will actively, steadily and methodically

further open up its market, but it should be at China's own pace, Gao said. 

     LIQUIDITY: PBOC injected CNY30 billion and CNY20 billion in 7-day and

14-day reverse repos on Thursday, respectively, with rates unchanged at 2.55%

and 2.70%, the central bank said on its website. This resulted in a net

injection of CNY30 billion as a total of CNY20 billion in reverse repos matured

today. CFETS-ICAP's money-market sentiment index closed at 39 on Wednesday, down

from 44 on Tuesday.

     DATA: The People's Bank of China's foreign-exchange (forex) purchase

position rose in April for a fourth straight month, reflecting a relatively

balanced flow of supply and demand, according to data released by the central

bank. The PBOC's forex purchase position on April 30 rose by CNY7.422 billion

m/m to CNY21.503 trillion, according to a statement posted on the PBOC website

Thursday - a level similar with March's CNY7.838 billion increase, the data

showed. 

     DATA: No projects were added to China's investments into overseas property,

sports and entertainment from January to April, Ministry of Commerce said

Thursday. This is a continuation from no investment in these fields last year,

after the government clamped down on unrationed outbound investment. In the

first four months, the country's outbound direct investment in overseas

non-financial sector increased 34.9% y/y to USD35.58 billion, the sixth

consecutive month of growth. Foreign direct investment into China in April

dropped 1.1% y/y to CNY59.24 billion (or up 1.9% to USD9.09 billion). From

January to April, FDI rose 0.1% to CNY286.78 billion (or 2% to USD43.6 billion).

     MONEY MARKET RATES: 7-day repo average dropped 2.7512% from the 2.8981% on

Wednesday, after PBOC net injected CNY30 billion of liquidity. The overnight

repo average decreased to 2.5655% from 2.7640% on Wednesday.

     YUAN: The yuan gained against the U.S. dollar after PBOC set a stronger

daily fixing. The yuan rose to 6.3652 against the U.S. unit, compared with the

official closing price of 6.3686 Friday. The People's Bank of China set the yuan

central parity rate at 6.3679 Thursday, stronger than Wednesday's 6.3745, after

setting the rate weaker for two days.

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

3.7100%, higher than the previous close of 3.7000%, according to Wind

Information.

     STOCKS: Shares declined in Shanghai, led by healthcare and medicine

companies after robust recent rises, with Zhejiang Xinguang Pharma down by more

than 9%. The benchmark Shanghai Composite Index was 0.48% lower at 3,154.28.

Hong Kong's Hang Seng Index declined 0.25% to 31,031.04. 

     FROM THE PRESS: Three measures can be taken to alleviate recent corporate

bonds default concerns: providing more funding to private companies;

deleveraging state-owned enterprises; and calling for financial institutions to

examine potential risks, said Cai Hao, the head of Macro Economy Research Center

of Heng Feng Bank Research Bureau, in Thursday's Economic Information Daily.

Companies whose debt scale is large and who find it difficult to get funding

should also be supported for some time, to prevent regional and systemic risks,

said Cai.

     Around 10 provinces have been competing to lead in supply-chain

innovations, an important part of supply-side reforms, by offering more

supporting policies on supply chains, and the central government is preparing to

publish more of such policies, reported Economic Information Daily on Thursday.

Supply-chain innovation will decrease the inventory levels of products, lower

the transactions costs of intermediate and product prices, and thus encourage

consumption, said the report, citing Wang Yanwu, associate professor at Macro

Economy Studies Center at Xiamen University.

     Ministry of Housing and Urban-Rural Development has talked to local

governments of 12 cities, including Hai Kou and Harbin, whose housing prices

have risen too rapidly recently, reported Shanghai Securities Journal on

Thursday. After the talks, some of these cities immediately published price

control policies on the property market to contain speculation, the report said.

MOHURD has iterated that controls on the property market will not be relaxed; in

fact, analysts expect more controlling measures to be put into place in May,

including restricting purchasing and selling and adjusting mortgage rates, the

report said, citing Xia Dan, the senior researcher at Bank of Communications

Financial Research Center.

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

--MNI Beijing Bureau; +86-10-8532-5998; email: beijing@marketnews.com

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