MNI China Daily Summary: Wednesday, January 23

     TOP NEWS: China's economy is expected to bottom out and stabilize after the

second quarter, then grow faster at the end, said Sheng Songcheng, former member

of the central bank's Monetary Policy Committee in an article published on

Wallstreet CN. The economy has already entered the bottom territory, while the

trade friction with the U.S. is likely to ease temporarily, the investment may

accelerate with structural upgrade, and some policies to stabilize the growth

and promote restructuring have been adopted, Sheng said.

     TRADE WAR: China and U.S. teams of negotiators maintain communications on

economic and trade consultation, said Hua Chunying, the spokesman of the

Ministry of Foreign Affairs at a presser in Beijing today, when pressed whether

the U.S. has declined China's offer to hold a preparatory talk this week due to

the lack of progress on technology transfer and structural reform.

     LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations

(OMOs) for a third day, resulting in a net drain of CNY350 billion which is the

total of reverse repos maturing, according to Wind. The central bank also

conducted a CNY257.5 billion one-year Targeted Medium-term Lending

Facility(TMLF) today, Wind said.

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

institutions (DR007) increased to 2.5363% from Tuesday's close of 2.5057%, Wind

Information showed. The overnight repo average increased to 2.2455% from

Tuesday's 2.2371%.

     YUAN: The yuan appreciated to 6.7888 against the U.S. dollar from Tuesday's

close of 6.8103. The PBOC set the yuan's central parity rate against the dollar

at 6.7969 on Wednesday, against 6.7854 yesterday.

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

3.1400%, up from the closing of 3.1300% on Tuesday, according to Wind

Information.

     STOCKS: The benchmark Shanghai Composite Index closed up 0.05% at 2,581.00.

Hong Kong's Hang Seng Index increased 0.01% to 27,008.02.

     FROM THE PRESS: China's economy is bound to slow down this year, mainly due

to the trade war and a cooling real estate market, The Paper reported late

Tuesday, citing Fang Xinghai, deputy director of China Securities Regulatory

Commission. However, he underlined that but it was a slowdown, not a collapse.

If the situation worsens, China still has room for fiscal expansion, such as

increasing the issuance of local government special bonds and CGBs, Fang said.

     There are expectations of accelerated reform of the housing and rental

market, land supply and property tax following President Xi Jinping's latest

meeting with provincial and central party cadres, calling for setting up a

long-term mechanism to stabilize the smooth development of the real estate

sector, said Securities Daily today.

     Canada may face a "severe backlash" from China if the extradition of

Huawei's CFO Meng Wanzhu proceeds, the government-run Global Times said in an

editorial. Effort by Canadian envoy to Washington pressing for quicker action

and shirking Canada's responsibilities may only backfire and further alienate

China, the newspaper said.

--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$$$]