MNI China Daily Summary: Wednesday, February 20

     POLICY: The People's Bank of China (PBOC) will offer CNY1.5 billion in

Central Bank Bill Swap (CBS), the first under the scheme designed to boost

banks' capital. Coded 1901001S, with 2.45% coupon rate, the one-year instrument

is offered to primary dealers in the open market at 0.25%, according to a

statement on the PBOC website.

     TRADE: China will boost the production of soybeans moderately and

reasonably according to consumption needs, but China will continue to rely on

the imports of soybeans, and the U.S. remains an important partner in China's

soybean trade, said Han Changbin, the Minister of Agriculture and Rural Affairs,

according to the State Council Information Office. The demand for soybeans in

China is about 110 million tons per year, while the soybean production in China

is around 16 million tons, and 90% of soybeans need to be imported, Han added.

     LIQUIDITY: The PBOC injected CNY20 billion via 7-day reverse repos today.

It resulted in a net injection of CNY20 billion as no reverse repos mature,

according to Wind Information.

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

institutions (DR007) decreased to 1.9000% from Tuesday's close of 2.2847%, Wind

Information showed. The overnight repo average decreased to 1.8400% from

Tuesday's 1.9489%.

     YUAN: The yuan strengthened to 6.7240 against the U.S. dollar from

Tuesday's close of 6.7675. The PBOC set the dollar-yuan central parity rate at

6.7558 compared with 6.7642 yesterday.

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

3.1180%, down 2 bps from the close of Tuesday, according to brokers.

     STOCKS: The benchmark Shanghai Composite Index rose 0.20% to 2,761.22. Hong

Kong's Hang Seng Index climbed 1.01% to 28,514.05. 

     FROM THE PRESS: The PBOC can lower the reserve requirement ratios to help

support the economy, the Economic Information Daily said, citing Lian Ping,

chief economist at the Bank of Communications. Policymakers should be cautious

using rate cuts as their impact may be limited, Lian was reported as saying by

the newspaper. 

     Local government bond issuance may total CNY295.86 billion in February,

down from CNY417.97 last month, Securities Daily said. The sales will support

construction of on-going infrastructure projects, help stabilize investment,

boost consumption and growth, the Daily said citing analysts. 

     The State Council yesterday issued its so-called No. 1 Document, an annual

plan for agriculture, including spending and subsidy increases to expand soybean

planting. The document also calls for improvement in the quality of baby formula

and food production that uses less chemicals.

--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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