MNI China Daily Summary: Tuesday, January 29

     POLICY: China's auto market has further room for growth, said Dong Dajian,

an official from the Ministry of Industry and Information Technology (MOIIT)

Tuesday. He saw 1.5 million 'new energy' car sales this year. Specific measures

to increase car sales include optimizing subsidies of new energy vehicles,

encouraging the replacement of old and high-pollution cars with new and electric

vehicles, promoting consumption of internet-connected vehicles, encouraging

rural citizens to upgrade autos, and ease restrictions on used car sales.

     TRADE WAR: China's vice premier Liu He, the nation's senior trade

negotiator, arrived in Washington Tuesday for high-level economic and trade

consultations with the U.S. Liu led a delegation which includes Yi Gang, the

governor of the People's Bank of China (PBOC); Ning Jizhe, vice chairman of the

National Development and Reform Commission; Liao Min, a vice finance minister;

Zheng Zeguang, vice foreign minister; Luo Wen, vice minister of MOIIT; Han Jun,

vice minister of agriculture and rural affairs, along with Wang Shouwen, vice

minister of commerce and a deputy trade representative, Xinhua News Agency

reported.

     LIQUIDITY: The PBOC skipped open market operations (OMOs) for a seventh

straight day, leaving liquidity unchanged, with no reverse repo maturing today,

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

system is at a relatively high level, enough to offset cash input, government

bond issuance and other factors.

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

institutions (DR007) increased to 2.7709% from Monday's close of 2.4437%, Wind

data showed. The overnight repo average decreased to 2.0571% from Monday's

2.1746%.

     Yuan: The yuan appreciated to 6.7309 against the U.S. dollar from Monday's

close of 6.7389. The PBOC set the yuan's central parity rate against the dollar

at 6.7356 on Tuesday, compared with the 6.7472 set on Monday.

     STOCKS: The benchmark Shanghai Composite Index fell 0.11% to 2,594.25. Hong

Kong's Hang Seng Index decreased 0.16% to 27,531.68.

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

3.1400%, down from Monday's closing 3.1525%, according to Wind Information.

     FROM THE PRESS: The PBOC's move to launch Central Bank Bills Swap(CBS)

scheme is not a Chinese version of QE, as banks cannot automatically obtain base

money from the PBOC with the central bank bills, Wallstreet CN reported late

Monday citing Sun Guofeng, director of the PBOC's Monetary Policy Committee. The

PBOC aims to support the liquidity of banks' perpetual bonds with CBS, but it

will not take credit risks, which will still be borne by banks and they cannot

use this tool to move assets off their balance sheets, Sun said, according to

Wallstreet CN.

     China's National Development and Reform Commission and 10 other departments

have issued a new plan today to boost consumption and underpin a strong domestic

market. The plans include measures to promote the sales of cars and home

appliance; upgrade information consumption; accelerate the launch of 5G

commercial licenses; and improve supporting policies of child care to encourage

births, China Business News reported.

     China will maintain a per capita real GDP growth rate of more than 6% per

year through 2020, Securities Daily reported today citing a study published by

Chongyang Institute for Financial Studies at Renmin University. The report

predicts that China's per capita real GDP growth will gradually decline from

2015 to 2040, but the average annual growth rate is between 5.8% and 6.2%, the

Daily said.

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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