MNI China Daily Summary: Thursday, October 18

     TOP NEWS: China would be willing to negotiate with the U.S. over specific

demands such as increasing American exports to the country, but agreement will

not be possible unless Washington is prepared to compromise, a senior researcher

linked to the Ministry of Commerce told MNI. "The U.S. should express clearly

whether it wants to negotiate," said Li Wei, lead researcher on the Americas at

the ministry's Chinese Academy of International Trade and Economic Cooperation

and formerly with Beijing's mission in Washington D.C.

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

(OMOs) on Thursday, leaving liquidity unchanged. No reverse repos mature today,

according to Wind Information. The central bank said liquidity in the banking

system is "relatively high" and sufficient to absorb the impact from the tax

season, government bond issuance and other factors. The 7-day weighted average

interbank repo rate for depository institutions (DR007) decreased to 2.5860%

from Wednesday's close of 2.5862%, according to Wind Information. The overnight

repo average increased to 2.4094% from Wednesday's 2.3294%.

     YUAN: The yuan depreciated to 6.9254 against the U.S. dollar from

Wednesday's close of 6.9249. The PBOC set the yuan central parity rate weaker at

6.9275, after having set it higher for two consecutive trading days.

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

3.5600%, down from 3.5850% on Wednesday, according to Wind Information.

     STOCKS: The benchmark Shanghai Composite Index closed 2.94% lower at

2,486.42. Hong Kong's Hang Seng Index decreased 0.58% to 25,314.30.

     FROM THE PRESS: The local governments of Beijing and Guangzhou are trying

to ease liquidity pressures for listed companies amid the A-share stock rout,

following Shenzhen's purchase of tens of billions of shares, Shanghai Securities

Journal reported. Guangzhou is considering measures to ease equity pledge risks,

according to a government official, the newspaper said. Dongxing Securities and

the Haidian bureau of the State-owned Assets Supervision and Administration

Commission of the State Council have set up a fund worth CNY10 billion to

support high-quality tech firms. Participating companies will have to give 10%

of their equity to the lender, the report notes. (Link to the story:

https://tinyurl.com/ycqm776b, https://tinyurl.com/ybwxobb2)

     The People's Bank of China (PBOC) has adjusted its calculation method for

total social financing (TSF) for the second time in three months. The

calculation now includes local government bonds, with the addition reflected in

a rise in TSF in September. Nevertheless, the overall trend in TSF remains

downward, the Securities Times reported. TSF rose to CNY2.21 trillion in

September, up from CNY1.51 trillion in August. However, when the CNY700 billion

in local government bonds issued in the month are removed from the total, the

TSF growth rate hit a new record low, the paper said. (Link to the story:

https://tinyurl.com/ycu63ck8)

     By not labelling China as a currency manipulator in its latest biannual

foreign exchange report, the U.S. Treasury has remained professional, resisting

pressure from President Trump, the Global Times said on Thursday. The US

Treasury report states that China does not meet the full set of criteria to be

designated a currency manipulator. These criteria include a trade surplus of at

least USD20 billion with the United States, a current account surplus of more

than 3% of GDP, and repeated intervention in the foreign exchange market. The

offshore RMB exchange rate against the U.S. dollar began to rise immediately

following the report's release, the paper noted. (Link to the story:

https://tinyurl.com/ycjprl4f)

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

--MNI Beijing Bureau; tel: +86 (10) 8532-5998; email: flora.guo@marketnews.com

--MNI London Bureau; +44 207-862-7489; email: ukeditorial@marketnews.com

[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]