MNI China Daily Summary: Wednesday, May 22

     TOP NEWS: China is against the U.S. abuse of state power to discredit and

suppress Chinese companies, said Lu Kang, a spokesman of the Ministry of Foreign

Affairs today, when asked to comment on media report that the U.S. is weighing

blacklist of up to five Chinese surveillance firms including Hangzhou Hikvision

Digital Technology Co. Chinese companies are required to do business overseas in

accordance with market and international rules, Lu added. Lu also reiterated

that trade and investment relations between countries must be based on mutual

respect, equality and mutual benefit.

     POLICY: China's State Council will set up a leading group to tackle

problems in the job market, review the proposed employment laws and regulations

as well as major policies, according to a statement on the government's website

published today. The announcement followed Premier Li Keqiang's remark on May

13, in which he urged promoting jobs and preventing large scale unemployment,

particularly with a record number of new graduates and ongoing uncertainties

dampening job stability.

     LIQUIDITY: The People's Bank of China injected CNY20 billion via 7-day

reverse repos, adding liquidity for the second day, resulting in a net injection

of CNY20 billion as no reverse repos mature, according to Wind Information. The

reverse repo aims to offset the impact of the tax season, the PBOC said.

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

institutions (DR007) fell to 2.5000% from Tuesday's close of 2.7349%, Wind

Information showed. The overnight repo average decreased to 2.6500% from

Tuesday's 2.7420%. 

     YUAN: The Chinese currency strengthened to 6.9040 against the dollar from

Tuesday's close of 6.9166. The PBOC set the dollar-yuan central parity rate

higher for the 10th trading day at 6.8992 compared with 6.8990 set on Tuesday.

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

3.3125%, up from Tuesday's close of 3.2900, according to brokers.

     STOCKS: The benchmark Shanghai Composite Index fell 0.49% to 2,891.70. Hong

Kong's Hang Seng Index increased 0.18% to 27,705.94.

     FROM THE PRESS: Washington's actions against Chinese tech firm Huawei

highlighted the need for China to be self-reliant in technology, the People's

Daily said in a commentary. Only by developing key technologies and core

equipment independently, can China safeguard its national economic security, the

paper said.

     China has never given in on its core interests, so it is unreasonable for

the U.S. to accuse Beijing of "reneging" on trade promises, the People's Daily

in an op-ed, noting it is the U.S. that has always been volatile in trade talks.

Washington's disregarding the facts and exerting extreme pressure on China has

seriously weighed on its international standing, which will not help solve any

problem, the paper said.

     The PBOC is planning a new sale of offshore yuan bonds, just one week after

it sold CNY20 billion of bills in Hong Kong on May 15, the Securities Daily said

citing a statement on the PBOC's Weibo account. Ongoing issuance of central bank

bills not only enriches yuan products in the Hong Kong market and adds a

liquidity management tool, but also helps to improve Hong Kong's yuan bond yield

curve and promote yuan internationalization, 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$$$]