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     TOP NEWS: China will follow three principles while opening its markets:
equal treatment and the use of negative list; the opening-up of the financial
industry will cooperate with the reform of exchange-rate formation mechanism and
capital account convertibility; attention will be paid to the prevention of
financial risks, matching the ability of financial supervision with the degree
of financial openness, said Yi Gang, China's newly appointed central bank
governor, on a panel at Boao on Wednesday.
     TOPS NEWS: China will accelerate its One Belt, One Road initiative spurred
by the escalating trade disputes with the U.S., Zhang Yansheng,
secretary-general of the Academic Committee of the National Development and
Reform Commission told MNI in an exclusive interview. "Given trading relations
with the U.S. are full of conflicts, China will turn to the OBOR nations as we
enjoy more comparative advantages and are more familiar with the markets in OBOR
countries," the advisor to the top economic planner said on Tuesday at the Boao
     DATA: CPI growth was much lower than expected, at 2.1% y/y compared with
the 2.6% median forecast in a MNI survey of 18 banks and other forecasters.
However, it was still the second-highest in more than a year. PPI grew 3.1%,
lower than 3.2% forecast in the MNI survey, the slowest pace since the 1.2% rate
seen in November 2016. Some analysts attributed the slowing PPI to the waning
effects of China's two-year campaign to curb excessive industrial production
     LIQUIDITY: PBOC skipped OMO on Wednesday and stated that current liquidity
is high enough to offset the impact of maturing reverse repo. This resulted in a
net drain of CNY20 billion caused by the maturity of reverse repo. CFETS-ICAP's
money-market sentiment index closed at 39 on Tuesday, down from 47 on Monday.
     MONEY MARKET RATES: 7-day repo average was last at 2.7062%, down from the
2.7168% Tuesday. Overnight repo average rose to 2.5587% from Tuesday's 2.5495%.
     YUAN: The yuan rose 0.24% to 6.2812 against the dollar, compared with the
closing of 6.2962 yesterday. PBOC set the central parity rate vs the U.S. dollar
at 6.2911 on Wednesday, stronger than 6.3071 set on Tuesday.
     BONDS: Yield on the benchmark 10-year China Government Bond was last at
3.7400%, up from the previous close of 3.7125%, according to Wind Information.
     STOCKS: Shares rose in Shanghai led by financial services sectors. The
benchmark Shanghai Composite Index closed 0.56% higher at 3,208.08. Hong Kong's
Hang Seng Index gained 0.56% to 30,901.87.
     FROM THE PRESS: China's financial sector will become stronger and more
developed, Securities Times reported citing Fang Xinghai, deputy head of China's
securities regulator. China's finance sector is expected to change the global
economy as it speeds up financial reform, Fang said. As the country with the
highest level of savings in the world, China will help boost global investment
by investing such savings around the world, he said.
     China's regional authorities have improved their measurement and management
of debt after the central government urged them to rein in their borrowing, 21st
Century Business Herald reported. Many provinces have started to examine the
exact amount and state of local debt and assets, the newspaper reported. Some
projects which were approved or financed were paused or stopped on tighter
supervision on project management. Local governments are seeking to increase
bond issuance, a market-based tool, to continue to finance some ongoing
projects, the newspaper reported citing Zhao Quanhou, a researcher affiliated
with the Ministry of Finance.
     The impact of the trade dispute between China and the U.S. should not be
exaggerated, China Securities Times said in a front-page commentary. The large
fluctuations of China's A-shares and U.S. shares are in fact still being driven
by their own fundamental factors, the newspaper said. 
--MNI Beijing Bureau; +86 10 85325998; email:
--MNI Beijing Bureau; +86 10 8532 5998; email:
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]

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