MNI China Daily Summary: Wednesday, February 13

     POLICY: The People's Bank of China (PBOC) auctioned CNY10 billion 3-month

bills and CNY10 billion 1-month bills in Hong Kong today, bearing coupon rates

of 2.45% and 2.8% respectively, the central bank said on its website. The sales

were to improve the yield curve of Hong Kong's yuan bonds and promote the

internationalization of the yuan, the PBOC said.

     TRADE: President Xi Jinping is set to meet key members of the US trade

delegation, including Trade Representative Robert Lighthizer and Treasury

Secretary Steven Mnuchin, in Beijing on Friday, the South China Morning Post

reported citing anonymous sources.

     LIQUIDITY: The PBOC skipped open market operations (OMO) for a third day,

resulting in a net drain of CNY270 billion as that amount of reverse repos

matured, according to Wind Information. There is also a CNY383.5 billion

medium-term lending facility(MLF) maturity, Wind said. The PBOC said the total

liquidity in the banking system is currently at a relatively high level, enough

to offset the maturing of MLF and reverse repos.

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

institutions (DR007) decreased to 2.2080% from Tuesday's close of 2.4112%, Wind

Information showed. The overnight repo average decreased to 1.6964% from

Tuesday's 1.9851%.

     YUAN: The yuan appreciated to 6.7596 against the U.S. dollar from Tuesday's

close of 6.7810. The PBOC set the dollar-yuan central parity rate at 6.7675

today, stronger than the 6.7765 set on Tuesday.

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

3.09%, flat from the close of Tuesday, according to brokers.

     STOCKS: The benchmark Shanghai Composite Index rose 1.84% to 2,721.07. Hong

Kong's Hang Seng Index climbed 1.16% to 28,497.59.

     FROM THE PRESS: China should actively promote major fiscal and taxation

reforms and reforms in finance, state-owned enterprises, electricity, oil and

gas industry, and the science and technology sector, Vice Premier Han Zheng told

officials at the National Development and Reform Commission on Tuesday,

according to a readout on the State Council's website. Han also emphasized the

necessity to strengthen the labor market and ensure employment.

     Foreign employees of domestically listed companies can participate in

A-share equity incentive schemes, using either funds earned in China or

transferred in from overseas, according to the State Administration of Foreign

Exchange (SAFE) and the PBOC. Foreign workers can now directly process

cross-border payments and fund transfers at banks without applying for a prior

approval if they have a registration certificate, according to SAFE.

     China can boost bond issuances or cut taxes and fees further if necessary,

the Economic Information Daily said citing a report published by Chinese Academy

of Social Sciences. In total, CNY2.6112 trillion local government bond quotas

were unused through end-2018, accounting for 14.1% of the total issuance, the

newspaper said citing the report.

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

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