MNI China Daily Summary: Tuesday, June 25

     POLICY: The People's Bank of China (PBOC) will continue to use policy

tools, including targeted reserve ratio cuts, targeted medium-term lending

facility and pledged supplementary lending, to increase financial support to

private and small businesses, according to report on small business lending

released to the media on Monday. Here are some of the key points from the report

and remarks by officials presenting the report, including Zou Lan, a deputy

director of financial markets at the central bank.

     LIQUIDITY: The PBOC skipped open market operations (OMOs) on Tuesday,

leaving liquidity unchanged as no reverse repos matured, according to Wind

Information. Total liquidity in the banking system is at a reasonable and ample

level, PBOC said in a statement on its website. 

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

institutions (DR007) rose to 2.4167% from Monday's close of 2.2708%, Wind

Information showed. The overnight repo average increased to 1.0088% from

Monday's 0.9931%.

     YUAN: The yuan weakened to 6.8809 from Monday's close of 6.8788. The PBOC

set the dollar-yuan central parity rate weaker for a second day at 6.8580 today,

compared with 6.8503 set on Monday.

     BONDS: The yield on the 10-year China Government Bond was last at 3.2625%,

up from Monday's close of 3.2500 , according to Wind Information.

     STOCKS: The benchmark Shanghai Composite Index fell 0.87% to 2,982.07. Hong

Kong's Hang Seng Index fell 1.15% to 28,185.98. 

     FROM THE PRESS: China's Vice Premier Liu He, who heads the trade

negotiation team, poke with U.S. counterparts Bob Lighthizer and Steven Mnuchin

on June 24, Xinhua News Agency reported. The two sides exchanged views on

economic and trade issues under the instructions of the presidents and agreed to

maintain talks, Xinhua said.

     The PBOC may cut reserve requirement ratios as early as June, Chu Jianfang,

a chief economist with CITIC Securities, the country's biggest brokerage, said

in a research note on Tuesday. The central bank is expected to make as many as

two more RRR cuts this year, Chu said.

     Official control over China's real estate market was unlikely to be

loosened in the short term, the Economic Information Daily reported on Tuesday.

Real estate companies look for overseas financing through vehicles such as bond

issuance to raise capital, but the current tight controls will likely further

frustrate them, the newspaper said citing an unidentified market source. 

     China won't compromise in the face of U.S hegemony, the People's Daily, the

official newspaper of the Communist Party of China, said in a commentary. 

Chinese people understand that the U.S. government's policy against China is an

external challenge that China must overcome in its nation revival, the newspaper

said. China won't accept its own interests being harmed, and it will protect its

national dignity and continue to develop, it said.

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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