MNI China Daily Summary: Wednesday, July 24

     POLICY: China's current interest rates are at appropriate levels and the

central bank will act according to the domestic conditions, Yi Gang, the

governor of the People's Bank of China, said in an interview with Caixin

published Tuesday. The purpose of lowering interest rates is mainly to deal with

deflationary risks, but China's inflation is moderate at present, as consumer

price was 2.7% in June and July, said Yi. The current interest rates are

appropriate, or close to "golden," or comfortable, levels, Yi said.

     LIQUIDITY: The PBOC skipped open market operations (OMOs) for a second day,

net-draining CNY100 billion as that amount of reverse repos matured, according

to Wind Information. Liquidity in the banking system is at a reasonable and

ample level, the PBOC said.

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

institutions (DR007) fell to 2.5301% from Tuesday's close of 2.5960%, Wind

Information showed. The overnight repo average decreased to 2.4759% from

Tuesday's 2.5541%.

     YUAN: The yuan strengthened to 6.8745 from Tuesday's close of 6.8794. The

PBOC set the dollar-yuan central parity rate weaker at 6.8860 today, compared

with 6.8818 on Tuesday. 

     BONDS: The yield on the 10-year China Government Bond was last at 3.17%,

higher than Tuesday's close of 3.1525%, according to Wind Information.

     STOCKS: The benchmark Shanghai Composite Index rose 0.80% to 2,923.28. Hong

Kong's Hang Seng Index edged up 0.20% to 2,8524.04. 

     FROM THE PRESS: China's Ministry of Commerce could release a list of

favoured imports of technologies and products, and encourage Chinese companies

to diversify sources of importing key components and advanced technology,

according to a statement published on the ministry's website on Tuesday. The

ministry was also committed to continuing to lower import tariff levels.

     China's National Development and Reform Commission (NDRC) has approved

around 40 infrastructure projects with investment totaling CNY950 billion so far

this year, according to the Securities Daily. The projects are largely in urban

rail, airport expansion and coal mining. China's transport infrastructure is a

key focus area for investment, the daily reported citing Ma Qiang, the deputy

director of the Infrastructure Development Bureau at NDRC.

     An open letter from 130 U.S. signatories urging President Donald Trump to

remain tough in his China policy was arrogant and malicious, Global Times said

in an editorial published late Tuesday. The letter encouraged confrontation

between the U.S. and China, something unwanted by either country or the rest of

the world. The letter demonstrated that there were people holding extreme views

towards China in the U.S., and China needed to remain strong in the face of

these opinions, the newspaper said.

--MNI Beijing Bureau; tel: +86 (10) 8532-5998; email: flora.guo@marketnews.com

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

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