MNI China Daily Summary: Tuesday, March 13

     TOP NEWS: China is simplifying government functions and centralizing power.

According to a draft plan submitted to the National People's Congress, which

will almost certainly approve it this week, China will combine several key

government organs involving economic, social and cultural sectors. - Combine

China Banking Regulatory Commission and China Insurance Regulatory Commission to

form the China Banking and Insurance Regulatory Commission. 

     LIQUIDITY: PBOC stated on its website Tuesday morning that it injected

CNY30 billion 7-day and CNY30 billion 28-day reverse repos, with rates unchanged

at 2.50% and 2.80%, respectively. The PBOC said the operation aimed to cushion

the impact of tax payments and to keep liquidity conditions reasonable and

stable. It resulted in a net injection of CNY60 billion as no reverse repo

matures today. CFETS-ICAP's money-market sentiment index closed at 47 on Monday,

up from 44 on Friday.

     MONEY MARKET RATES: Average 7-day repo rates rose to 2.8968%, compared with

Monday's average of 2.8258, after the PBOC injected a net CNY60 billion via its

open-market operations. The overnight repo average increased to 2.6445% from

Monday's 2.5837%.

     YUAN: The yuan fell against the U.S. dollar after the PBOC set a stronger

daily fixing. The yuan fell 0.05% to 6.3309 against the U.S. unit, compared with

the official closing price of 6.3236 yesterday. The People's Bank of China set

the yuan central parity rate vs the U.S. dollar at 6.3218 on Tuesday, stronger

than Monday's 6.3333. The central bank has set the fixing stronger for two days.

     BONDS: The yield on the benchmark 10-year China Government Bond edged up to

3.8400%, up from the previous close of 3.8200%, according to Wind Information.

     STOCKS: Shares dropped in Shanghai, led by property companies on slowing

sales growth of the sector, with HaiNan Pearl River Holdings down close to 5%.

The benchmark Shanghai Composite Index closed down 0.49% at 3,310.24. Hong

Kong's Hang Seng Index slipped 0.23% to 31,522.62. 

     FROM THE PRESS: China will merge the country's banking and insurance

regulators to form a new body named China Banking and Insurance Regulatory

Commission, Caixin reported citing a State Council document. The People's Bank

of China will be tasked with setting regulations on banking and insurance, and

will create the basic supervision structure of the new commission, according to

Caixin.

     China will accelerate market-based debt-to-equity swaps, China Securities

Journal reported, citing China Banking Regulatory Commission (CBRC) Chairman

Wang Zhaoxing. Private financial institutions and capital will be allowed to

participate in these swaps, the newspaper reported citing Wang.

     China needs to properly execute the reform of the Communist Party and

various government structures, Liu He, director of Office of the Central Leading

Group of Financial and Economic and Affairs, wrote in article published in

People's Daily. The reform shall also clarify differences between the

responsibilities of local and the central governments, he said. 

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

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

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