MNI China Daily Summary: Tuesday, June 30

     TOP NEWS: China's National People's Congress on Tuesday unanimously

approved a national security law for Hong Kong prohibiting acts of secession,

subversion, terrorism and collusion with foreign forces that endanger national

security, the South China Morning Post reported. On Monday, the U.S. government

revoked Hong Kong's special status citing the law compromises the city's

autonomy.

     DATA: China's manufacturing Purchasing Manager Index (PMI) stood above

breakeven for the fourth month at 50.9 in June, following 50.6 in May. The rise

mirrored a stable recovery in both supply and demand after authorities further

eased lockdowns, the National Bureau of Statistics said.

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

for the second day, resulting in a net drain of CNY90 billion given the same

amount of reverse repos matured today, according to Wind Information. Fiscal

spending increased at the month-end, and liquidity in the banking system is

reasonable and ample, the PBOC said on its website.

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

institutions (DR007) increased to 2.3013% from 2.1840% on Monday, Wind

Information showed. The overnight repo average rose to 1.8298% from 1.0107%.

     YUAN: The yuan strengthened to 7.0732 against the dollar from 7.0776 on

Monday. PBOC set the dollar-yuan central parity rate lower at 7.0795, compared

with the 7.0808 set on Monday.

     BONDS: The yield on 10-year China Government Bonds was last at 2.8250%,

down from the close of 2.8525% on Monday, according to Wind Information.

     STOCKS: The Shanghai Composite Index rose 0.78% to 2,984.67. Hong Kong's

Hang Seng Index rallied 0.52% to 24,427.19.

     FROM THE PRESS: China's economic policy focus should shift to stimulating

growth while also continuing to bail out companies, Caijing Magazine reported

citing Yu Yongding, a former member of the PBOC's monetary policy committee. Yu

said that the key is the provision of sufficient funds for infrastructure

investment. Achieving over 3% nominal GDP growth this year entails double-digit

investment growth in the second half, particularly infrastructure investment,

Caijing cited Yu as saying.

     China's monetary policy will maintain ample liquidity with the potential

cuts to interest rates and reserve requirement ratios (RRRs), the Economic

Information Daily reported citing analysts. The PBOS is expected to cut the RRR

twice totalling one percentage point in the second half, with 40 bps cuts to the

rate on medium-term lending facility, the newspaper said citing Wang Qing, chief

analyst with Golden Credit Ratings. 

     China's new Wealth Management Connect plan, allowing the cross-border

offering of wealth management products by certain Mainland, HK and Macau banks,

will further boost the opening up of China's capital account and facilitate yuan

conversion, the National Business Daily reported citing analysts. The plan also

showed cross-border use of yuan now expands to investment by individuals from

trade, the newspaper said.

--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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