MNI China Daily Summary: Wednesday, April 17

     TOP NEWS: China's industrial output in March soared at the fastest pace in

more than four years while investment also gained, helping stabilize growth in

the first-quarter at 6.4%, beating the 6.3% median of a forecast surveyed by

MNI. Industrial output jumped 8.5% y/y last month from the pace of 5.3% in the

first two months, data by the National Bureau of Statistics showed. Fixed-asset

investment quickened to 6.3% y/y in Q1 from 6.1% in the first two months, in

line with the 6.3% median in an MNI survey. The mild acceleration was supported

by a steady property investment gain, and a pickup in infrastructure spending

which offset a slowdown in manufacturing investment. Retail sales beat MNI

forecast of 8.3% forecast at 8.7% y/y from 8.2% in January and February.

     LIQUIDITY: The People's Bank of China (PBOC) injected CNY160 billion via

7-day reverse repos. This resulted in a net injection of CNY160 billion as no

reverse repos mature today, according to Wind Information. The PBOC also

injected a total of CNY200 billion one-year medium-term lending facility (MLF),

aiming to keep the total liquidity of the banking system at a reasonable and

ample level, the PBOC said. There is also a maturity of CNY366.5 billion MLF

today, Wind Information said.

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

institutions (DR007) fell to 2.7900% from Tuesday's close of 2.8713%, Wind

Information showed. The overnight repo average rose to 3.0000% from Tuesday's

2.8941%.

     YUAN: The Chinese currency strengthened to 6.6858 against the dollar from

Tuesday's close of 6.7073. The PBOC set the dollar-yuan central parity rate at

6.7110 today, compared with 6.7097 set on Tuesday.

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

3.3800%, down from Tuesday's close of 3.3900, according to brokers. 

     STOCKS: The benchmark Shanghai Composite Index rose 0.29% to 3,263.12. Hong

Kong's Hang Seng Index fell 0.02% to 30,124.68.

     FROM THE PRESS: Chinese house prices could continue to ramp higher as the

property market and wider economy continue to improve, although the government

should use regulations to prevent further increases, according to a commentary

in the Economic Information Daily by Sheng Songcheng, the former director of the

Survey and Statistics Division of the PBOC. Sheng said policymakers could

increase supply instead of dampening demand, in addition to preventing a deluge

of funds from flowing in to the real estate sector.

     The PBOC is expected to guide banks to adjust their credit structures as

well as tighten the monitoring of capital flows, Securities Times said in a

front page commentary today. The newspaper pointed to a record high number of

new short-term loans in the household sector as a source of risk which could

develop into an asset price bubble. China's monetary policy is unlikely to be

tightened in the short term, though the PBOC is also under less pressure to

further loosen policy settings, the newspaper 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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