MNI China Daily Summary: Thursday, September 19

     POLICY: China's third-quarter growth may slow to 6.1% and return to 6.2% in

Q4, with whole-year growth at 6.2-6.3%, according to Zhang Yuxian, director

general of Economic Forecasting Department of the State Information Center, an

advisory group under the National Development and Reform Commission. The economy

expanded 6.3% in the first half. China is likely to further cut rates to reduce

lending costs, such as by lowering the Medium-term Lending Facility rates, as

rate cuts by other central banks leave more room for the PBOC to follow suit,

said Zhang, declining to say when he thought cuts may come. 

     LIQUIDITY: The People's Bank of China (PBOC) injected CNY120 billion via

7-day reverse repos as well as CNY50 billion via 14-day reverse repos. This

resulted in a net injection of CNY170 billion as no reverse repos matured today,

according to Wind Information. The injections aim to offset the tax season,

government bond issuance, the maturity of local treasury's cash management and

maintain stable liquidity, the PBOC said.

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

institutions (DR007) rose to 2.7342% from 2.6608% on Wednesday, Wind Information

showed. The overnight repo average increased to 2.7446% from 2.6403% yesterday.

     YUAN: The yuan weakened to 7.0987 against the dollar from Wednesday's close

of 7.0879. The PBOC set the dollar-yuan central parity rate higher at 7.0732,

compared with 7.0728 on Wednesday.

     BONDS: The yield on 10-year China Government Bond was last at 3.1025%, down

from the close of 3.1225% on Wednesday, according to Wind Information.

     STOCKS: The benchmark Shanghai Composite Index gained 0.46% to 2,999.28.

Hong Kong's Hang Seng Index tumbled 1.07% to 26,468.95.

     FROM THE PRESS: China should ramp up the construction of infrastructure

projects and promote a new urbanization push, Xinhua News Agency reported late

Wednesday citing President Xi Jinping. Xi also commented that China should focus

on developing its high-quality manufacturing sector and emphasise innovation as

a driver of economic growth.

     China and the U.S. should manage differences and expand co-operation, the

People's Daily overseas edition reported citing Cui Tiankai, the Chinese

Ambassador to the U.S. The main problem in the China-U.S. relationship is the

wrong perception of China by the U.S., as China is still a developing country

with a priority on improving the lives of its citizens, and won't compete for

global hegemony, the daily cited Cui as saying.

     China's tax and fee cuts this year are expected to exceed CNY2 trillion,

Shanghai Securities News reported citing Xu Hongcai, Vice Minister of Finance.

The report said that given reduced fiscal revenue, the Chinese government should

strengthen performance management, reduce general expenditure, and promote the

more efficient use of capital.

     The Federal Reserve's 25 bps interest rate cut marked a new era of easing

in central banks' monetary policies, the Securities Times reported citing Galaxy

Securities. The report said Fed cut was expected, and noted it was only two

months since the last rate cut.

--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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