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     POLICY: The People's Bank of China (PBOC) will enhance its role in
providing deposit insurance for small and medium-sized banks facing "regional
and structural" liquidity risks, Xinhua news agency reported on Wednesday,
citing an unidentified PBOC official. The PBOC will also ensure timely and
adequate liquidity, the official said, noting that regulators must ensure
lenders are held accountable and strengthen the role of local governments as the
first resort for maintaining stability.
     LIQUIDITY: The PBOC skipped open market operations for the 16th day,
leaving liquidity unchanged as no reverse repos mature today, according to Wind
Information. Total liquidity in the banking system is reasonable and ample, the
PBOC said.
     RATES: The seven-day weighted average interbank repo rate for depository
institutions (DR007) decreased to 2.3702% from Tuesday's close 2.3724%, Wind
Information showed. The overnight repo average fell to 2.0687% from 2.1838%
yesterday.
     YUAN: The yuan weakened to 7.0386 against the dollar from Tuesday's close
7.0385. PBOC set the dollar-yuan central parity rate lower for the second day at
7.0385, compared with Tuesday's 7.0400.
     BONDS: The yield on 10-year China Government Bonds was last at 3.1850%,
down from Tuesday's close of 3.1950%, according to Wind Information. 
     STOCKS: The Shanghai Composite Index edged up 0.24% to 2,924.42, as finance
and media shares advanced. Hong Kong's Hang Seng Index gained 0.79% to
26,645.43.
     FROM THE PRESS: China's target of stabilizing growth does not necessarily
mean keeping rate above 6%, according to an article in the Beijing News written
by Guan Tao, a former official at the State Administration of Foreign Exchange.
The Chinese government may not take excessive policies in the current downturn
as long as jobs are maintained and incomes continue to rise, said Guan. China
should stabilize growth through reform, not short-term stimulus, Guan said.
     The PBOC may not rapidly increase liquidity to boost M2 money supply given
weak loan demand and rising inflation, the Securities Daily reported citing
analysis from the Bank of Communications. PBOC may use quantitative tools this
month to boost liquidity before early issuances of next year's local government
special purpose bonds, the newspaper said.
     China's CPI is likely to decrease in Q2 due to the stabilization of pork
prices, the Shanghai Securities News reported citing Lian Ping, the chief
economist of Bank of Communications. Recent measures to control pork prices have
eased the gains and may cool inflation, the newspaper cited Lian as saying.
--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
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]