MNI China Daily Summary: Tuesday, April 16

     POLICY: China's local governments have quickened the pace of issuing bonds

under central fiscal authority's order to help support growth, the Ministry of

Finance said. Regional governments this year have sold bonds about four to five

months ahead of the pace of last year, a spokesman told reporters in a briefing

on the first-quarter's fiscal standing. While the implementation of the

value-added-tax cuts places pressure on fiscal income, the government is

confident that this year's fiscal growth targets will be met, the ministry also

said.

     POLICY: The World Trade Organization should revamp its categorization of

member countries into developing and developed nations, two trade experts

advising the Chinese government have said, suggesting that Beijing could

surrender some benefits for manufacturing while keeping others for areas such as

agriculture. WTO members should be able to request special treatment on the

basis of their development level in specific areas, said Tu Xinquan, a foreign

trade expert at the Advisory Committee for Economic and Trade Policy of the

Ministry of Commerce, at a discussion on WTO reform at the Center for China and

Globalization on Monday.

     DATA: The average price of new homes in 70 major cities increased 11.3% y/y

in March, the fastest gain in 23 months. This compares with an 11.1% gain in

February, according to MNI calculations. On a m/m basis, the average price was

up 0.6% in March, higher than gains of 0.5% in February.

     DATA: China's outbound direct investment in March rose 10% from a year ago

to $9.55 billion, data released by the MOFCOM today showed. That compared with

7.5% y/y gain in February. China invested in 2060 companies in 143 countries and

regions in the first quarter valued $25.21 billion, the ministry said.

     LIQUIDITY: The People's Bank of China (PBOC) injected CNY40 billion via

7-day reverse repos on Tuesday, ending the 18-day long suspension of open market

operations. This results in a net injection of CNY40 billion as no reverse repos

mature today, according to Wind Information.

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

institutions (DR007) decreased to 2.8000% from Monday's close of 2.8038%,

according to Wind Information. The overnight repo average rose to 2.9000% from

2.8046% on Monday.

     YUAN: The yuan weakened to 6.7073 against the U.S. dollar from Monday's

close of 6.7059. The PBOC set the dollar-yuan central parity rate at 6.7097

today, compared with 6.7112 set on Monday.

     STOCKS: The benchmark Shanghai Composite Index rose 2.39% to 3,253.60,

hitting the highest level since March 23, 2018, fueled by the strong rally of

financial shares and 5G related stocks. Hong Kong's Hang Seng Index increased

1.07% to 30,129.87.

     BONDS: The yield on the 10-year China Government Bond was last at 3.3900%,

up from Monday's close of 3.3700, according to brokers. 

     FROM THE PRESS: The PBOC is unlikely to change the loosening bias of its

monetary policy because the recovering economy still requires ample liquidity,

Ming Ming, chief fixed income analyst at CITIC Securities, wrote in a report

today. The accelerated issuance of Chinese government and local government bonds

also need a low interest rate environment, Ming said. The PBOC said in the 1st

quarterly meeting to "keeping the gate of general money supply instead of

allowing a deluge of liquidity," confirmed the marginal tightening of monetary

policy in the first quarter, Ming said. The PBOC held its 1Q meeting on April

12, according to a statement on its website yesterday.

     China's GDP growth may reach 6.3% this year, helped by the easing trade war

with the U.S. and positive stimulus policies, according to Shen Jianguang, chief

economist at JD Finance. China requires more substantial reform to stabilize

growth, given that the economy is still facing strong pressure on exports and a

possible "liquidity trap," Shen said.

     Housing regulations in China have not been relaxed and could be further

tightened if home sales in first- and second-tier cities become over-heated, the

Shanghai Securities News reported. Most cities are unlikely to remove their

current housing sales restrictions and some have renewed the crackdown in

response to recent media speculation of a robust market recovery, 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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