MNI China Daily Summary: Tuesday, May 7

     TRADE: China's Vice Premier Liu He, also the senior trade negotiator, will

visit Washington on May 9 and 10 to carry out the 11th round of trade

negotiation with the U.S., according to a statement on the website of the

Ministry of Commerce.

     TRADE: China sincerely wants to continue trade negotiations with the U.S.

and won't avoid conflicts as it's normal to have differences, China National

Radio reported citing Geng Shuang, a spokesman of the Ministry of Foreign

Affairs. Raising tariffs won't resolve issues, while maintaining mutual respect,

equality and benefits provides the basis for an agreement, Geng was cited as

saying.

     DATA: FX reserves fell by $3.81 billion to $3.0950 trillion from March at

$3.0987 trillion, ending a five-month increase. The slight decline was mainly

due to exchange rate conversion and asset price fluctuations, according to the

State Administration of Foreign Exchange.

     LIQUIDITY: The People's Bank of China (PBOC) injected CNY20 billion via

7-day reverse repos on Tuesday, adding liquidity for second straight day. This

resulted in a net injection of CNY20 billion given no reverse repos mature

today, according to Wind Information.

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

institutions (DR007) decreased to 2.2000% from Monday's close of 2.4168%,

according to Wind Information. The overnight repo average fell to 1.4100% from

1.6404% on Monday.

     YUAN: Dollar-yuan strengthened to 6.7607 against the U.S. dollar from

Monday's close of 6.7666. The PBOC set the dollar-yuan central parity rate at

6.7614 today, higher than the 6.7344 set on Monday.

     STOCKS: The benchmark Shanghai Composite Index rose 0.69% to 2,926.39. Hong

Kong's Hang Seng Index rose 0.52% to 29,363.02.

     BONDS: The yield on the 10-year China Government Bond was last at 3.3600%,

up from Monday's close of 3.3500, according to brokers. 

     FROM THE PRESS: China is well prepared for any potential outcomes including

a temporary breakdown in trade talks, said Global Times in a commentary

published on Tuesday after a government spokesman said the Chinese team is

prepared to head back to Washington for "consultation." China should stay calm

in response to the U.S.'s threat of raising tariffs and prepare for a protracted

negotiation process, even as Washington may appear eager for a quick agreement

or to maximize its interests at the last minute, given that Chinese market is

too big to easily give up, the newspaper said.

     China's economy has the resilience to withstand external headwinds and

achieve high-quality development, the People's Daily said in a front page report

today. During the three-day Labor Day holiday, about 195 million people

travelled domestically, with the total online banking transactions valued as

high as CNY1.29 trillion, the newspaper cited the data noting the economy has

strong internal drivers.

     Selective reserve requirement ratio cut for rural commercial banks Monday

showed the PBOC's intention to appease market sentiment by maintaining ample

liquidity, the Securities Times noted in a commentary. Stabilizing market

expectations is important amid global financial market volatility due to an

unexpected escalation in trade friction between China and the U.S., the paper

said.

     China's financial industry has accelerated opening-up, introducing more

overseas capital since the start of this year, the Securities Times said. As of

April, the State Administration of Foreign Exchange approved 13 Qualified

Foreign Institutional Investors (QFII) to bring in a total of US$4.74 billion in

2019, exceeding the total amount approved last year. A total of 12 RMB Qualified

Foreign Institutional Investors (RQFII) were given the green light to invest

CNY24 billion, exceeding half of the total approved in 2018. The market is

expecting CNY600 billion more inbound foreign capital this year, the newspaper

said, citing a report by Great Wall Securities, noting that foreign capital is

becoming important funding in the A-share market.

--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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