MNI China Daily Summary: Wednesday, April 24

     POLICY: China should be able to achieve the full removal of tariffs placed

on its exports by the U.S. if it further reforms its economy, a senior

researcher at a Ministry of Commerce think tank told MNI, noting that the

mechanism used to impose the duties means they cannot be reversed in what he

expects to be successful trade talks. Progress in structural economic reform,

addressing issues such as subsidies and the role of state-owned enterprises,

could permit the U.S. to end an investigation under Section 301 of the Trade

Act, which was used by President Donald Trump to implement punitive levies, Huo

Jianguo, a former head of the research institute of the MOFCOM and currently

vice chairman of the ministry's China Society for World Trade Organization

Studies, said in an interview.

     POLICY: China respects international business practices, treats all

businesses registered in China equally, protects foreign-funded enterprises'

legitimate rights and interests, and resolutely punishes infringement of their

intellectual property rights, Shen Changyu, director of National Intellectual

Property Administration said during the 2019 High Level Forum on China IP

Protection today in Beijing. The administration is outlining a strategy of

developing China into a strong IP country, which will match the need of its

high-quality development, Shen added.

     LIQUIDITY: As China's economy shows signs of steadying and fiscal stimulus

measures kick in, the People's Bank of China has slowed the flow of liquidity

into the market, the latest MNI China Liquidity Survey shows. Liquidity

tightened again in April, according to interbank traders, with 64.3% of survey

respondents noting a deterioration on the previous month -- slightly lower than

the 71.4% who saw tighter conditions in March. Although the majority saw

conditions tighter in April, just over a third of those surveyed saw conditions

either unchanged or easier.

     LIQUIDITY: The PBOC skipped open market operations for the third trading

day, resulting in a net drain of CNY160 billion as the same amount of reverse

repos matured, according to Wind Information. However, the PBOC injected a total

of CNY267.4 billion one-year targeted medium-term lending facility (TMLF), with

an interest rate of 3.15%, according to the PBOC.

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

institutions (DR007) rose to 2.9000% from Tuesday's close of 2.7510%, Wind

Information showed. The overnight repo average fell to 2.7600% from Tuesday's

2.8335%.

     YUAN: The Chinese currency strengthened to 6.7179 against the dollar from

Tuesday's close of 6.7192. The PBOC set the dollar-yuan central parity rate at

6.7205 today, compared with 6.7082 set on Tuesday.

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

3.4300%, up from Tuesday's close of 3.4000, according to brokers. 

     STOCKS: The benchmark Shanghai Composite Index rose 0.09% to 3,201.61. Hong

Kong's Hang Seng Index fell 0.53% to 29,805.83.

     FROM THE PRESS: The PBOC has no plan for a targeted reserve requirement

ratio cut, according to the PBOC-run Financial News, combating rumours

suggesting the central bank will cut the RRR by one percentage point for rural

commercial banks and rural credit cooperatives from April 25. Also, media

reports saying banks will be allowed to adjust RRR based on the results of

quarterly macro-prudential assessment (MPA) are not true, the newspaper said

citing the PBOC. The PBOC noted that it will only make adjustment based on MPA

at the beginning of the year, not quarterly, the paper said.

     The PBOC should use more monetary policy tools to underpin economic growth

as the economy stabilizes, the Securities Daily said in an op-ed today. The PBOC

should establish a policy framework to implement a lower reserve requirement

ratio (RRR) for small and medium-sized banks, use the targeted medium-term

lending facility (TMLF) to replenish liquidity to the market in a timely manner,

and use substitutional RRR cuts to ease the pressure on some financial

institutions due to MLF operations, the newspaper said. -- Of note, the PBOC

injected nearly CNY270 billion in TMLFs Wednesday, just the second time it had

used the facility, although the total came below that expected by many market

traders.

     Local government bonds issued to individual and small/medium-sized

institutional investors via bank counters this year have fallen below par, with

three LGBs under the support price of CNY99, 21st Century Business Herald

reported. The lowest LGB priced is CNY98.65, issued by the Beijing government,

the newspaper said. This reverses the earlier popularity that the first batch of

seven LGBs selling via bank counters were sold out in 10 minutes, the newspaper

added.

--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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