MNI China Daily Summary: Thursday, May 28

     EXCLUSIVE: China's reviving real estate market looks set to be a driver of

economic recovery from the Covid-19 slowdown, likely prompting Beijing to hold

off from moving ahead with a tax on property, policy advisors told MNI. The

central government recently toned down long-considered plans for the imposition

of a property tax, stating in a document on May 18 that legislation for the levy

should be introduced "properly". This word contrasted with "steadily", which it

had used in 2019, and probably indicates a more cautious approach, noted Zhang

Yiqun, director of a fiscal studies institute affiliated with the Jilin province

finance department.

     POLICY: China will likely see positive growth this year even if there isn't

a quantifiable GDP goal, Premier Li Keqiang said Thursday in his annual address

to the media. China has set six tasks instead of a hard growth target, including

protecting jobs, people's welfare and businesses. Achieving these goals will

lead to positive and high growth, he said. According to Li, China has fiscal,

financial and social welfare policies in reserve to manage future crisis and

will enact them in a timely fashion, Li said at the conclusion of the National

People's Congress.

     LIQUIDITY: The People's Bank of China (PBOC) injected CNY240 billion via

7-day reverse repos with the rate unchanged at 2.2% on Thursday, according to a

statement on the PBOC website. The injection aims to offset the impact of

government bond issuance and enterprise income tax settlement and other factors,

the PBOC said. It also aims to keep liquidity reasonable and ample, the PBOC

added.

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

institutions (DR007) rose to 2.1825% from Wednesday's close 2.0248%, Wind

Information showed. Overnight repo average increased to 2.1102% from 2.1093%

yesterday.

     YUAN: The yuan weakened to 7.1600 against the dollar from Wednesday's close

7.1540. PBOC set the dollar-yuan central parity rate higher at 7.1277, compared

with the 7.1092 set on Wednesday.

     BONDS: The yield on 10-year China Government Bonds was last at 2.6900%,

down from Wednesday's close of 2.7100%, according to Wind Information.

     STOCKS: The Shanghai Composite Index gained 0.33% to 2,846.22. Hong Kong's

Hang Seng Index lost 0.72% to 23132.76. 

     FROM THE PRESS: The Canadian court ruling to keep Huawei CFO Meng Wanzhou

in custody may further worsen bilateral relations between Canada and China

including trade, Global Times reported by quoting He Weiwen, a former senior

trade official and an executive council member of the China Society for World

Trade Organization Studies. 

     China can cut rates further as the CPI continues to fall, helping reduce

high financing costs for small businesses, which is the core challenge in the

monetary environment, Securities Times said in a commentary. 

     China is publishing a series of documents to overhaul its financial system,

covering reforms in capital markets and bond markets, and the recapitalisation

of small-and-medium-sized banks, the People's Bank of China said.

--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

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