MNI China Daily Summary: Wednesday, July 22

     TOP NEWS: China will take necessary measures responding to the order from

the U.S. to close its consulate in Houston, Texas in the next 72 hours, the

Ministry of Foreign Affairs said Wednesday. "We urge the US to immediately

revoke this erroneous decision. Should it insist on going down this wrong path,

China will react with firm countermeasures," spokesman Wang Wenbin said in a

statement sent to the press.

     POLICY: China must focus on developing its enormous domestic market to

counter growing international pressure including rising protectionism and

weakening demand, President Xi Jinping said in a meeting with domestic and

foreign company executives on Tuesday. "We must gradually form a new development

structure with the domestic cycle as the main body and with the domestic and

international cycles complementing each other," Xi said according to an official

statement posted on the central government website.

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

operations, leaving liquidity unchanged, according to Wind Information.

Liquidity in the banking system is reasonable and ample, the PBOC said on its

website.

     RATES: The seven-day weighted average interbank repo rate for depository

institutions (DR007) decreased to 1.9614% from Tuesday's close 2.0846%, Wind

Information showed. The overnight repo average fell to 1.3419% from 1.5514%

yesterday.

     YUAN: The yuan strengthened to 6.9980 against the dollar from Tuesday's

close 7.0002. PBOC set the dollar-yuan central parity rate lower for a third day

at 6.9718, compared with the 6.9862 set on Tuesday.

     BONDS: The yield on 10-year China Government Bonds was last at 2.9000%,

down from Tuesday's close of 2.9100%, according to Wind Information. 

     STOCKS: The Shanghai Composite Index rose for the fifth trading day by

0.37% to 3,333.16, while the CSI300 index also rose for the fourth day by 0.50%

to 4,714.45. Hong Kong's Hang Seng Index lost 2.25% to 25,057.94.

     FROM THE PRESS: China's goods retail sales in June returned to the same

level as last year at CNY3 trillion, the Economic Information Daily reported

citing the Ministry of Commerce. Sales of durable goods rose sharply, with

communication equipment, cosmetics, and home appliances up 7.4, 7.6 and 5.5

percentage points, respectively, from May. Consumption is seen to further

improve as business and income support policies kick in, the newspaper cited the

ministry as saying.

     China and France are committed to letting Huawei invest in French 5G

networks, the Xinhua News Agency reported late Tuesday following the conclusion

of a bilateral economic dialogue. France will ensure its strategic and national

security interests protected, Xinhua said citing the French Minister of Economy

and Finance Bruno Le Maire.

     The Chinese economy still faces challenges including lagging consumer

demand, weak income growth and employment, Tian Xuan, the deputy dean of the PBC

School of Finance at Tsinghua University wrote in a commentary in the People's

Daily. Private companies providing 80% of jobs are still impacted by the

epidemic and more attentions should be given to the economic structure when

evaluating growth, Tian 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

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