MNI China Daily Summary: Wednesday, November 14

     TOP NEWS: China needs to advance the opening up of its financial sector

amid an "extremely complicated and uncertain international and domestic economic

environment," a senior China banking and insurance watchdog said Wednesday.

Instead of stepping back from globalization amid increasing protectionism,

opening up and cooperation are needed to prevent a future financial crisis, Wang

Zhaoxing, the vice chairman of the China Banking and Insurance Regulatory

Commission told a forum in Beijing. (See full story:

https://www.marketnews.com/node/1836022)

     DATA: China's Industrial production grew 5.9% y/y in October, picking up

from the three-year-low 5.8% recorded in September. FAI grew 5.7% in the Jan-Oct

period, continuing to expand from Jan-September's 5.8% gain and recover from a

series low of 5.3% in Jan-Aug period (since the data first compiled in 1992).

Retail sales growth fell to a 5-month-low of 8.6% y/y in October, decreasing

from the 9.2% growth reported in September. 

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

(OMOs) Wednesday, leaving liquidity unchanged, as no reverse repos matured,

according to Wind Information. The central bank said liquidity in the banking

system is at a reasonable and ample level.

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

institutions (DR007) decreased to 2.6144% from Tuesday's close of 2.6326%, Wind

Information showed. The overnight repo average decreased to 2.3132% from

Tuesday's 2.4484%.

     YUAN: The yuan closed at 6.9527 against the U.S. dollar from Tuesday's

close of 6.9531. The PBOC set the yuan central parity rate at 6.9402 on

Wednesday, picking up from Tuesday's 6.9629.

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

3.4175%, down from the closing price of 3.4650% on Tuesday, according to Wind

Information.

     STOCKS: The benchmark Shanghai Composite Index closed 0.85% lower at

2,632.24. Hong Kong's Hang Seng Index decreased 0.54% to 25,654.43.

     FROM THE PRESS: China's October fiscal revenue fell year-on-year for the

first time this year, weighed by tax and fee cuts, as well as VAT reform, Xinhua

news agency said late Tuesday, citing Zhang Lianqi, a fiscal and taxation

expert. Fiscal revenue was CNY1.572 billion in October, down 3.1% y/y on October

2017, with tax revenue down by 5.1% y/y to CNY1.346 billion, Xinhua said, citing

Finance Ministry data. (Link to the story: https://bit.ly/2DCRO4T)

     China's fiscal deficit rate should be increased to 4%, The Paper said

Wednesday, citing Yao Yudong, former director of the Financial Research

Institution of The People's Bank of China on Tuesday. Chinese small and

medium-size banks have insufficient collateral to apply to the Medium-term

Lending Facility (MLF), so liquidity released by the central bank can't reach

the real economy. A 4% deficit rate is reasonable and can mitigate the risk of a

lack of collateral, the newspaper said citing Yu. (Link to the story:

https://bit.ly/2DCX1Kf)

     China is expected to meet its target of cutting at least 500 million tons

of coal production capacity and 150 million tons of crude steel capacity two

years ahead of schedule, the Economic Information Daily (Xinhua news subsidiary)

said Wednesday citing an anonymous insider. Along with its campaign to cut

overcapacity, China is also facing the problem of insufficient supply of future

capacity, EID said. Therefore, the total capacity to be reduced next year will

be lowered and the campaign will focus on structural optimization of production

capacity, as the government aims to gradually replace the obsolete capacity with

advanced ones, the newspaper said. (Link to the story: https://bit.ly/2DkKKJu)

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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