MNI China Daily Summary: Wednesday, April 10

     POLICY: China's economy still faces headwinds from weak property and

automobile sectors along with slowing global demand, an official advisor for a

government-backed think tank told MNI in an interview, adding that he expected

weak exports to weigh on imports as well. Despite PMI data showing signs of a

pick-up, growth in Q1 will be soft, impacted by the follow-through from a weak

2018, said Niu Li, deputy director of the Economic Forecasting Department at the

National Information Center, affiliated to the National Development and Reform

Commission. Niu is concerned the economy will remain weak into Q2, with car

sales struggling, affecting output in associated industries, and property

investment also expected to remain low as regulations weigh on sentiment.

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

for the 15th straight trading day, leaving liquidity unchanged as no reverse

repos matured, according to Wind Information. Total liquidity in the banking

system remains at a relatively high level, according to the PBOC.

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

institutions (DR007) rose to 2.5000% from Tuesday's close of 2.3869%, Wind

Information showed. The overnight repo average increased to 2.2200% from

Tuesday's 1.8013%.

     YUAN: The Chinese currency weakened to 6.7166 against the dollar from

Tuesday's close of 6.7125. The PBOC set the dollar-yuan central parity rate at

6.7110 today, compared with 6.7142 on Tuesday.

     BONDS: The yield on the benchmark 10-year China Government Bond was last at

3.32%, up 2.5 bps from Tuesday's close, according to brokers. 

     STOCKS: The benchmark Shanghai Composite Index rose 0.07% to 3,241.93. Hong

Kong's Hang Seng Index fell 0.13% to 30,119.56.

     FROM THE PRESS: Some local banking regulators are pushing large banks to

tighten the recognition of NPLs from the current 90 days to just 60 days, China

Securities Journal reported. Regulators are looking to improve banks' asset

quality, but the move would pressure bank profitability in the short-term as

they are likely to increase their reserves, the newspaper reported citing

Everbright Securities chief banking analysts Wang Yifeng.

     China's policymakers may have less room to relax monetary policy given

rising consumer prices, while the recovering property market inflates asset

prices, Shen Jianguang, chief economist at JD Finance, wrote in a report. While

the economy may have bottomed out, a worldwide economic slowdown limits exports

and surging infrastructure investment undermines effort to contain local

government debt, Shen added.

     Infrastructure investment growth is expected to rebound to around 10%-15%

this year, the Securities Daily reported citing Wang Qing, chief macroeconomic

analyst at credit-rating agency Dongfang Jincheng. This could add one percentage

point to GDP growth, 0.2 percentage point more than in 2018, Wang was cited as

saying.

     Banks are paying higher rates on deposit accounts to help pull in funds

from the public, the Economic Daily said in a commentary. Individuals will

benefit, but bank operating costs will rise, with medium and small banks in

particular under pressure, the paper 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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