MNI China Daily Summary: Wednesday, April 25

     TOPS NEWS: China's latest Politburo meeting emphasized the importance of

stable economic growth, putting maintained economic growth higher up the agenda

and hinting at more easing policies, a source close to the People's Bank of

China told MNI. "Although the policymaker has not addressed the change directly,

there are already signs," the PBOC source said. "So we would see more RRR

(reserve requirement ratio) cut and M2 growth is expected to rebound above 9%

this year," he added. Monday's Politburo meeting stressed that meeting the

annual target "will require painstaking efforts", in sharp contrast to Premier

Li Keqiang's press conference during National People's Congress Session a month

ago stating the government is very confident about meeting the annual growth

target. 

     POLICY: China's housing sales volume this year may drop as much as 5% on

tight control policies while prices may stay flat, S&P Global Ratings said

Wednesday in a webcast. Momentum in markets of lower-tiered cities, which drove

the growth of the sector last year, is unlikely to be sustained, said Cindy

Huang, director of the corporate ratings. The government will maintain tight

controls with campaign against shadow banking restricting developers' financing

and thus growth of the sector, S&P said.

     LIQUIDITY: The PBOC refrained from new Open Market Operations on Wednesday,

stating that the cut in required reserve ratio taking effect today will inject

liquidity to absorb the impact from  maturing reverse repos. This resulted in

net drain of CNY150 billion as the same amount of reverse repos matured today,

said Wind Information. CFETS-ICAP's money-market sentiment index closed at 76 on

Tuesday, down from 81 on Monday.

     MONEY MARKET RATES: 7-day repo average dropped to 2.9991% from 3.0358% on

Tuesday, after the PBOC net drained CNY150 billion. The overnight repo average

fell to 2.7806% from Tuesday's 2.8089%.

     YUAN: The yuan fell 0.03% to 6.3145 against the U.S. dollar, compared with

the official closing price of 6.3092 yesterday. The PBOC set the yuan central

parity rate stronger for the first time in six days at 6.3066, compared with

Tuesday's 6.3229.

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

3.6100%, up from the previous close of 3.5750%, according to Wind Information.

     Stocks: Shares declined in Shanghai, led by property companies on recently

issued property controls in areas such as Hainan and Shenyang, with Fujian

Sannong Group down by close to 6%. The benchmark Shanghai Composite Index closed

0.35% lower at 3,117.97. Hong Kong's Hang Seng Index dropped 1.07% to 30,308.59.

     FROM THE PRESS: Chinese officials are drafting a guideline to expand

imports to further balance trade with other countries, China Securities Journal

reported, citing unidentified people with knowledge of the issue. The guidance

will include details about China's lowering duties for consumer goods such as

medicine and necessities, policies to encourage imports of advanced technology

and key machine components, the newspaper said, citing experts including Zhao

Ping, director of international trade research department at China Council for

the Promotion of International Trade. Tariff reduction should be based on

China's reality, differentiated and step-by-step to allow domestic companies to

adjust, Bai Ming, deputy head of international market research institute under

the MOFCOM, told the journal.

     China's monetary policy will likely see more minor adjustments even though

the overall principle is prudent and neutral, China Securities Journal said in a

commentary. There may be more targeted small changes, the newspaper said. A

Politburo meeting on April 23 attended by top leaders including Chairman Xi

Jinping didn't mention controlling M2 growth, which may hint monetary policy

could lean neutral-to-loose if the economy needs it, the journal said. It is not

necessary for monetary policy to be loosened too much to prevent too much credit

in the financial market, the newspaper said.

     China must acquire critical advanced technologies such as semiconductors so

that other countries wont' be able to blunt its rise, the People's Daily said in

a commentary. China must be determined to make break-through in core

innovations; it may also import some technology and seek to advance it, the

daily said. ***Comment: After the U.S. banned selling equipment including chips

to Chinese mobile phone maker ZTE, causing the company to halt production, China

iterated the importance of innovation and producing its own technological

components such as chips.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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