MNI China Daily Summary: Tuesday, March 19

     TOP NEWS: China's overall fiscal stimulus this year will be 6.6% of GDP, up

significantly from Moody's calculation of a 4.7% of GDP last year, according to

a note sent to MNI by the rating agency. Such fiscal easing, will partly offset

the negative economic impact of the country's deleveraging and de-risking

policies, as well as tensions with the U.S. However, the effectiveness of tax

cuts as a stimulus measure is largely untested, while the mismatch between

spending and revenue allocations at the central and local levels also reduces

the effectiveness of fiscal policy, Moody's said.

     LIQUIDITY: The People's Bank of China (PBOC) injected CNY50 billion through

open market operations on Tuesday. With no reverse repos maturing, the net

injection was the full CNY50 billion, according to Wind Information.

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

institutions (DR007) decreased to 2.7500% from Monday's close of 2.7563%,

according to Wind Information. The overnight repo average fell to 2.7000% from

2.7693% on Monday.

     YUAN: The yuan depreciated to 6.7154 against the U.S. dollar from Monday's

close of 6.7123. The PBOC set the dollar-yuan central parity rate at 6.7062 on

Tuesday, compared with 6.7088 set on Monday.

     YUAN: The yuan is stuck in a tight range around CNY 6.71 against the US

dollar, awaiting fresh direction from the wider U.S. Dollar Index, said Guan

Tao, a senior researcher at the China Finance 40 Forum, the Securities Times

reported. He attributed the recent appreciation of the yuan to counter-cyclical

controls which made it easier for the yuan "to rise than fall", increased yuan

demand in the FX market, and the overall weaker dollar index.

     STOCKS: The benchmark Shanghai Composite Index fell 0.18% to 3,090.98. Hong

Kong's Hang Seng Index increased 0.19% to 29,466.28.

     BONDS: The yield on the 10-year China Government Bond was last at 3.17%, up

0.5 bps from Monday's close, according to brokers.

     FROM THE PRESS: Local banking and insurance regulators will have more

autonomy to give approvals to insurers seeking to change locations, opening

provincial branches and confirming senior management appointments, the 21st

Century Business Herald reported.

     China's incoming property tax will not significantly increase the tax

burden on ordinary families, reported the Securities Daily. The newspaper cited

Huang Zhilong, director of the Macroeconomic Research Center at Suning Institute

of Finance, who said that even if the tax is fully levied, policymakers will

implement defined tax-free areas or a tax rebate plan for ordinary families.

     Policymakers should maintain previous housing policies that promoted

diversified supply and cracked down on speculation, according to a commentary in

the Financial News published today. The PBOC-owned newspaper warned that without

a clear signal from policymakers, the housing market would be unable to adjust

on its own.

--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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