MNI China Daily Summary: Tuesday, September 3

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

(OMOs). This resulted in a net drain of CNY80 billion given the same amount of

reverse repos matured, according to Wind Information. The liquidity in the

banking system is at a relatively high level, enough to offset the maturity of

reverse repos, the PBOC said.

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

institutions (DR007) fell to 2.5798% from Monday's close of 2.6325%, Wind

Information showed. The overnight repo average decreased to 2.5104% from 2.5463%

on Monday.

     YUAN: The yuan closed at 7.1785 against the U.S. dollar from 7.1716 on

Monday. The PBOC set the dollar-yuan central parity rate higher at 7.0884,

compared with 7.0883 on Monday.

     BONDS: The yield on the 10-year China Government Bond was last at 3.0600%,

down from Monday's close of 3.0700%, according to Wind Information.

     STOCKS: The benchmark Shanghai Composite Index edged up 0.21% to 2,930.15.

Hong Kong's Hang Seng Index tumbled 0.39% to 25,527.85.

     FROM THE PRESS: China had urged the U.S. to abide by the earlier consensus

between the two countries on trade if it wants a win-win agreement with China,

People's Daily said in a commentary. The U.S.-China trade talks need equality

and mutual respect and cannot progress without trust, the newspaper said.

     China's market expects a higher quota of local government bond issuance

after a meeting of the Financial Stability and Development Committee signaled

increasing support for special bond issuance, the Financial News reported. There

remains CNY1.2 trillion unused quota for special bonds from previous years,

according to the report.

     The China Banking and Insurance Regulatory Commission plans to check on

real estate loan business in 32 cities, the Economic Daily reported. The

inspection will cover land reserve and development loans, individual mortgages,

and tenant lease loans, the daily said. The inspection will also verify if banks

have used off-balance sheet and interbank channels to lend to the real estate

market, the daily 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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