MNI China Daily Summary: Wednesday, May 13

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

for the 11th day, 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) rose to 1.2583% from Tuesday's close 1.2475%, Wind

Information showed. Overnight repo average fell to 0.6832% from 0.7798%

yesterday.

     YUAN: The yuan weakened to 7.0936 against the dollar from Tuesday's close

7.0886. PBOC set the dollar-yuan central parity rate lower at 7.0875, down from

the 7.0919 set on Tuesday.

     BONDS: The yield on 10-year China Government Bonds was last at 2.6800%, up

from Tuesday's close of 2.6400%, according to Wind Information.

     STOCKS: The Shanghai Composite Index gained 0.22% to 2,898.05. Hong Kong's

Hang Seng Index lost 0.27% to 24,180.30.

     FROM THE PRESS: President Xi Jinping urged local governments to help

companies restoring production timely and effectively during a tour of Shanxi

province, Xinhua News Agency reported. Local authorities should seek to boost

consumption and strengthen the real economy, particularly manufacturing, and

devise major investment projects to drive growth, Xi said according to Xinhua.

     China should expand demand and increase financial supports to help small

businesses coping with the crisis, accelerate major investment projects, promote

private investment and let service industry such as catering and tourism return

to normal, the State Council said in a statement. China should also strive to

meet SMEs' capital requirement, the statement read.

     China's imports may see double-digit growth this year after resurging

starting May and June, money.163.com reported citing former Vice Minister of

Commerce Wei Jianguo. Imports of bulk commodities such as coal, iron ore and

copper will increase steadily as more infrastructure projects have begun and

many cities will likely experience surging demand for imported high-end consumer

goods, agricultural products, seafood and pharmaceutical products, Wei said. The

implementation of the China-U.S. phase one deal would also help to promote

imports, Wei said.

     Reduced inflationary pressure through a slowing CPI will free up space for

further countercyclical adjustment in China, according to a commentary in the

China Securities Journal. Reserve requirement ratio (RRR) cuts and rate cuts to

the medium-term lending facility are both necessary to better mitigate the

impact of the epidemic and support the real economy, the newspaper said. Any

further RRR cuts should match the timing of issuing local government special

bonds or special Chinese Government Bonds, according to the commentary.

--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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