MNI China Daily Summary: Thursday, May 7

     BEIJING (MNI) - POLICY: Spending on restaurants and hotels in China during

the May Labour Day holiday recovered to about 70% of last year's level as curbs

on travel and social gathering were eased, while consumer retail sales also

rebounded quickly, spokesman Gao Feng of the Ministry of Commerce said in an

online briefing on Thursday.

     POLICY: China's central leadership is sending a "guiding group" to the

virus epicentre Hubei province to ensure its anti-epidemic measures are

implemented and its directive reinforced at the frontline, Xinhua News Agency

reported citing a politburo meeting held yesterday. "Overseas spread of the

epidemic hasn't been effectively checked while some domestic regions have seen

epidemic gathering," Xinhua cited President Xi Jinping as saying. While Hubei's

epidemic control is changing to "normalizing from emergency and abnormal," the

anti-epidemic measures shall not be loosened and paused, Xinhua cited Xi as

saying.

     DATA: China's exports rose unexpectedly in April while imports dropped more

quickly due to a weaker yuan and a plunge in commodity prices, according to data

from China's General Administration of Customs released today. Exports rose for

the first month this year, by 3.5% y/y to $200.28 billion, moderating from 6.6%

y/y fall in March. Imports fell 14.2% y/y to $154.94 billion, accelerating from

last month's 0.9% y/y fall.

     DATA: China's FX reserves rose to $3.0915 trillion at the end of April,

$30.8 billion more than a month ago, data by the State Administration of Foreign

Exchange (SAFE) today showed. The increase was caused by changes in exchange

rates and asset prices as major countries increased monetary easing and fiscal

stimulus to counter the impact of the coronavirus, SAFE said. The yuan gained

0.58% against the U.S. dollar in April, Wind data showed. 

     DATA: The Caixin China services PMI rose 1.4 points to 44.4 in April on a

monthly basis but remained below breakeven 50, indicating the output of the

service industry declined at a slower pace. The new order sub-index declined for

the third month, while new export order fell to the second lowest on record,

indicating shrinking demand from home and abroad, said Caixin. Service companies

have reduced employment levels for the third month, with the employment

sub-index dropping to the lowest level in history, according to Caixin.

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

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

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

website.

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

institutions (DR007) decreased to 1.4478% from Wednesday's close 1.5740%, data

by Wind Information showed. The overnight repo average fell to 1.1322% from the

previous 1.4604%.

     YUAN: The currency strengthened to 7.0906 against the dollar from

Wednesday's 7.0959 close. PBOC set the dollar-yuan central parity rate higher at

7.0931, compared with 7.0690 set on Wednesday, marking the biggest daily rise in

12 trading days.

     BONDS: The yield on 10-year China Government Bonds was last at 2.6100%, up

from Wednesday's close of 2.5600%, according to Wind Information.

     STOCKS: The Shanghai Composite Index edged down 0.23% to 2,871.52. Hong

Kong's Hang Seng Index lost 0.65% to 23,980.63.

     FROM THE PRESS: China will allow small private companies to delay income

tax remissions and ask local authorities to help businesses extend debt

repayments and gain bank lending if they  maintain employment, the State Council

said following its weekly executive meeting late Wednesday. 

     China's consumption index for the life services industry rose to 91.5% by

May 4, up from 75.9% before the five-day Labour Day holiday began, China Central

Television reported citing data from the Meituan Research Institute. Data also

showed more people visiting restaurants in larger cities including Shenzhen and

Shanghai over the holiday period, CCTV reported.

--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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