MNI China Daily Summary: Tuesday, November 5

     EXCLUSIVE: China won't fully acquiesce to key U.S. trade demands in areas

such as intellectual property rights protection, making a comprehensive

settlement to the two nations' dispute unlikely despite an interim agreement

expected in the near future, government advisors told MNI. "China and the U.S.

will not be able to compromise when it comes to substantial issues," said Shi

Yinhong, a professor at the School of International Studies, Renmin University

of China, adding that the best prospect for the removal of tariffs imposed

during the dispute would come if there were a threat of a recession before the

2020 U.S. presidential election, prompting Washington to make concessions.

     POLICY: China will further open up its market and let domestic consumption

play a fundamental role in economic development, President Xi Jinping said in a

speech at the opening ceremony of the 2nd China International Import Expo (CIIE)

today. China will boost imports by further lowering tariffs and administrative

costs while giving access to high-quality goods and services from other

countries, according to Xi.

     DATA: Caixin China services PMI fell to 51.1 in October from 51.3 in the

previous month, the lowest in a year. New orders decelerated to the slowest

growth since February, though still held up by strong customer demand and new

product launches, said Caixin. The decrease reported by Caixin was in line with

the official PMI for the service sector, released Thursday, which fell 1.6 to

51.4.

     LIQUIDITY: The People's Bank of China (PBOC) injected CNY400 billion via

1-year medium-term lending facility (MLF) with the rate lowered to 3.25% by 5

bps. The amount basically matches that maturing today, and the central bank

didn't conducting reverse repos, it said on its website.

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

institutions (DR007) decreased to 2.3153% from Monday's close of 2.4398%, Wind

Information showed. The overnight repo average fell to 1.8635% from Monday's

2.0489%.

     YUAN: The yuan broke 7 against the dollar for the first time in three

months, closing at 6.9975 from 7.0302 on Monday, even after PBOC set the central

parity rate weaker for the first time in six trading days at 7.0385 from 7.0382

yesterday.

     BONDS: The yield on 10-year China Government Bonds was last at 3.2425%,

down from the close of 3.29000% on Monday, according to Wind Information.

     STOCKS: The Shanghai Composite Index rose 0.54% to 2,991.56 as financial

and agriculture stocks rallied, while some blockchain shares tumbled more than

5%. Hong Kong's Hang Seng Index increased 0.49% to 27,683.40.

     FROM THE PRESS: The yuan may rebound against the dollar in the near term

due to market expectations that China's economy will stabilize in Q4 while the

dollar index may decline on softening U.S. economy, the China Securities Journal

reported citing unnamed analysts. PBOC's scheduled issuance of central bank

bills in Hong Kong on Thursday may solidify expectations for appreciation, the

newspaper said. 

     China needs better coordination between monetary and fiscal policies to

stabilize development and push forward economic reforms, People's Daily said in

its commentary. Fiscal policies, such as tax cuts and local government special

bonds, should combine with monetary policies to better prevent financial risks,

the newspaper said.

     China will relax restrictions on shareholdings by foreign financial

institutions and support their establishment of local branches and subsidiaries,

the Shanghai Securities Journal reported citing Huang Hong, vice chairman of the

China Banking and Insurance Regulatory Commission.

--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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