MNI China Daily Summary: Wednesday, August 21

     LIQUIDITY: The People's Bank of China (PBOC) injected CNY60 billion via

7-day reverse repos, adding liquidity for an eighth consecutive day. This

resulted in a net drain of CNY40 billion given the maturity of CNY100 billion in

reverse repos, according to Wind Information.

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

institutions (DR007) fell to 2.6474% from Tuesday's close of 2.6635%, Wind

Information showed. The overnight repo average decreased to 2.5811% from

Tuesday's 2.6366%.

     YUAN: Dollar-yuan was last at 7.0632, little changed from Tuesday's close

of 7.0634. The PBOC set the dollar-yuan central parity rate lower at 7.0433,

compared with 7.0454 on Tuesday. 

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

3.0575%, up from 3.0300% on Tuesday, according to Wind Information.

     STOCKS: The benchmark Shanghai Composite Index edged up 0.01% to 2,880.33.

Hong Kong's Hang Seng Index increased 0.15% to 26,270.04.

     FROM THE PRESS: China may consider expanding the issuance of local

government special bonds in Q4 from the current annual quota of CNY2.15

trillion, according to a front page report in the Securities Times. The

newspaper said the issuance could be expanded due to an increased risk of weaker

domestic and foreign demand. Fiscal policies were also required, although they

may be constrained by a decline in revenue growth, the Times said.

     U.S. policies to escalate the trade war with China were causing more

American companies to lay off staff, the People's Daily said in a commentary.

The Daily said the U.S. should not blame China for the problems of U.S.

industry, and even the closure of American firms. Competitive and high quality

Chinese products were legally traded, despite punitive measures by the U.S.

against Chinese companies accused of dumping goods.

     Chinese banks have significantly increased the use of capital replenishment

tools to break credit supply constraints, China Securities Journal reported.

Citing analysts, the Journal said that so far this year the value of capital

supplementary bonds issued by commercial banks totalled a record CNY705.1

billion. This comprised both perpetual and secondary capital bonds.

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]