MNI China Daily Summary: Tuesday, March 26

     TOP NEWS: China is the ninth most competitive economy in Asia for the sixth

year, according to an official report released at the Boao Forum, which kicked

off its annual meeting today in Hainan, China. South Korea and Taiwan took the

top two spots held by Singapore and Hong Kong last year, according to the report

covering 37 economies in the Asia Pacific region.

     DATA: The total assets of banking and financial institutions in China stood

at CNY265.99 trillion by end-Feb, a rise of 7.1% y/y, with total liabilities

CNY243.95 trillion, an increase of 6.7% y/y, the Securities Times reported

citing data released by China Banking and Insurance Regulatory Commission.

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

for the fifth trading day, resulting in a net drain of CNY50 billion as the same

amount of reverse repos matured, according to Wind Information. Total liquidity

in the banking system is at a reasonable and ample level, according to the PBOC.

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

institutions (DR007) decreased to 2.5000% from Monday's close of 2.7246%,

according to Wind Information. The overnight repo average fell to 2.3000% from

2.5383% on Monday.

     YUAN: The yuan weakened to 6.7129 against the U.S. dollar from Monday's

close of 6.7112. The PBOC set the dollar-yuan central parity rate at 6.7042

today, compared with 6.7098 set on Monday.

     STOCKS: The benchmark Shanghai Composite Index fell 1.51% to 2,997.1, as

market sentiment soured on caution ahead of the coming Sino-U.S. trade talks.

Defense stocks led the drop, with serval major military industrial shares

declining by more than 9%, Wind Information said. Hong Kong's Hang Seng Index

increased 0.15% to 28,566.91.

     BONDS: The yield on the 10-year China Government Bond was last at 3.095%,

down 2.5 bps from Monday's close, according to brokers. The yield extended its

slide into a third trading day.

     FROM THE PRESS: A planned reduction in the social security contribution by

companies is expected to lower contributions by CNY800 billion, the Securities

Daily reported today. The social security contribution, set to decline to 16%

from 20% on May 1, will reduce employers' costs and boost jobs, the newspaper

reported citing Zhang Yiqun, a researcher at the Society of Public Finance of

China which is affiliated with the Ministry of Finance.

     China will respond to downward economic pressure through cuts in taxes and

fees rather than expanding the fiscal deficit and loosening monetary policy,

China Securities Daily reported citing Premier Li Keqiang. China will open up

and stimulate the domestic market to keep growth in a reasonable and healthy

range, Li was cited as saying.

     The limited downside of the dollar combined with slower Chinese growth will

prevent the yuan from further appreciation, the China Securities Journal said in

a commentary. The yuan is likely to stay stable this year with little chance for

a one-way move, 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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