MNI China Daily Summary: Tuesday, July 30

     TOP NEWS: China's Communist Party Politburo, the country's highest power

body, met today to discuss the current economic situation and implement economic

work for the second half, Xinhua News Agency said in a brief statement. The

meeting was chaired by Xi Jinping, the party's general secretary. 

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

(OMOs) for a sixth straight day today, leaving liquidity unchanged, according to

Wind Information. Liquidity in the banking system is at a reasonable and ample

level, said the PBOC.

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

institutions (DR007) rose to 2.6712% from Monday's close of 2.6579%, Wind

Information showed. The overnight repo average fell to 2.6158% from 2.6234% on

Monday.

     YUAN: The yuan strengthened to 6.8845 from Monday's close of 6.8920. The

PBOC set the dollar-yuan central parity rate higher at 6.8862 today, compared

with 6.8821 on Monday.

     BONDS: The yield on the 10-year China Government Bond was last at 3.1750%,

down from Monday's close of 3.1800%, according to Wind Information.

     STOCKS: The benchmark Shanghai Composite Index rose 0.39% to 2,952.34. Hong

Kong's Hang Seng Index gained 0.14% to 28,146.50.

     FROM THE PRESS: The PBOC needs not to follow a possible rate cut by the

Federal Reserve given China's stable economy and monetary and FX policies, the

China Securities Journal said in commentary. A widening of the rate

differentials between the two countries also helps stabilize the yuan, even if

the dollar index is inflated.

     The PBOC is expected to cut reserve requirement ratios (RRR) rather than

interest rate in the second, the Securities Daily reported citing analysts. The

RRR cuts will likely be made for small-to-medium banks, the daily said citing

Tao Jin, a researcher at Suning Institute of Finance. The PBOC will keep OMOs

more effectively linked to the deposit and lending rates so interest rates can

be lowered by countercyclical adjustment, the newspaper said.

     China's short-term external debt at the end of last year was the highest

since 1994 at $1.27 trillion, about 41.4% of the foreign exchange reserves, the

21st Century Business Herald reported citing data from SAFE, warning authorities

to take preventative measures. The fast accumulation was due to foreign

investors' interest in yuan bond after the Bond Connect was launched in 2017,

the newspaper reported.

     Commercial housing inventory in 100 Chinese cities tracked by the E-House

Real Estate Research Institute rose 6% y/y to 452.03 million square meters due

to the tightening housing regulations, which may force some developers to cut

prices, the Shanghai Securities News reported today citing the institute. 

--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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