MNI China Daily Summary: Thursday, May 9

     TRADE: China will implement retaliatory measures if the U.S. does raise

additional tariffs on Chinese exports, said Gao Feng, the spokesman of the

Ministry of Commerce in a briefing today. China's stance on trade negotiation is

clear and consistent, Gao added, noting that China hopes the two countries work

in same direction and solve frictions on equal basis. 

     DATA: CPI rose to 2.5% y/y in April, edging up from March's 2.3% to hit a

six-month high, lower than the 2.6% projected by economists polled by MNI,

according to data released by the National Bureau of Statistics today. PPI

accelerated to 0.9% y/y from March's 0.4%, beating the 0.6% forecast in an MNI

survey and hitting a four-month high. The increase can be attributed mostly to

increasing cost of pork and oil.

     DATA: China's M2 expanded 8.5% y/y in April, slowing from 8.6% in March, in

line with the MNI survey median forecast, data published by the People's Bank of

China today showed. New loans totalled CNY1.02 trillion, less than CNY1.2

trillion projected by MNI. The gain was the third-highest this year following a

record CNY3.23 trillion in January and CNY1.69 trillion in March. Aggregate

financing to the economy rose CNY1.36 trillion, more than halved March's CNY2.86

trillion, missing the CNY1.7 trillion projected in an MNI survey. It was also

the third-fastest growth this year, following January's record CNY4.64 trillion.

     LIQUIDITY: The PBOC skipped open market operations on Thursday, leaving

liquidity unchanged as no reverse repos matured, according to Wind Information.

Total liquidity in the banking system is at a relatively high level, according

to the PBOC.

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

institutions (DR007) rose to 2.4900% from Wednesday's close of 2.1895%, Wind

Information showed. The overnight repo average increased to 1.5200% from

Wednesday's 1.1522%. 

     YUAN: The yuan weakened to 6.8227 against the dollar from Wednesday's close

of 6.7716. The PBOC set the dollar-yuan central parity rate at 6.7665 today,

higher than the 6.7596 set on Wednesday.

     BONDS: The yield on 10-year China Government Bond was last at 3.2950%, down

from the close of 3.3100 on Wednesday, according to brokers.

     STOCKS: The benchmark Shanghai Composite Index fell 1.48% to 2850.95, hurt

by souring sentiment after renewed Sino-U.S. trade tension. Finance and liquor

shares led the drop, according to Wind Information. Hong Kong's Hang Seng Index

decreased 2.39% to 28,311.07.

     FROM THE PRESS: China is well prepared for trade negotiations with the U.S.

amid an escalation in the tariff wars, the Global Times said in an editorial 

following a notice posted to the Federal Register confirming U.S. President

Donald Trump's threat to hike tariffs on $200 billion of Chinese imports. China

is better prepared for any outcome, including retaliatory tariffs and plans to

reduce losses incurred by Chinese enterprises, the paper said, adding that

Beijing isn't afraid of going into a trade war.

     China has urged the U.S. to respect its sovereignty and abide by the

one-China principle and the Three Joint Communiques when handling Taiwan-related

issues, the People's Daily said today in a front-page editorial, after the lower

chamber of the U.S. Congress unanimously backed legislation supporting Taiwan.

China's government and people have the confidence and capacity to defeat

interference in its domestic affairs, the paper said.

     The land markets in second-tier cities started to heat up in recent weeks,

with land premium rate exceeding 30% in several regions, while housing markets

are more varied, the China Securities Journal reported. Housing transactions in

first-tier cities decreased on a monthly basis after the recovery earlier,

although prices remain stable. Both prices and turnover in second-tier housing

hotspots continue to rise, while those in third- and four-cities declined from

the peak earlier, the newspaper said citing Zhang Dawei, chief analyst at

Centaline Property.

--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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