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MNI China Daily Summary: Wednesday, November 29

     TOP NEWS: China's economy still faces relatively large downward pressures
and these may become apparent in the first quarter of 2018, Yu Xuejun, chairman
of the Supervisory Board for Key State-Owned Financial Institutions under the
China Banking Regulatory Commission, said Wednesday during the Caijing Annual
Conference in Beijing. The negative effects triggered by previous economic
stimulus and credit expansion are obvious and could easily cause a series of
problems, including assets bubbles, rising debt ratios and a rapid expansion of
financial institutions' balance sheets, Yu warned, adding these problems could
cause new financial system risks. (Caijing Magazine)
     TOP NEWS: The Organization for Economic Cooperation and Development on
Tuesday upgraded its expectations for China's economic growth this year and next
to 6.8% and 6.6%, respectively, from its June forecast of 6.6% and 6.4%, citing
the brisk pace of infrastructure investment and the ongoing rebalancing of
China's growth model. The OECD also said in its twice-yearly "Economic Outlook"
that it expects growth in 2019 to soften to 6.4% as export decelerate.
     RATES: Money market rates fell. The seven-day repo average was last at
2.8913%, lower than Tuesday's average of 2.9202%. The overnight repo average was
at 2.6348%, lower than Tuesday's 2.7728%.
     LIQUIDITY: The People's Bank of China injected CNY160 billion in seven-day
reverse repos, CNY70 billion in 14-day reverse repos and CNY10 billion in 63-day
reverse repos via open-market operations. This resulted in a net zero
injection/drain for the day, as a total of CNY240 billion in reverse repos
matured on Wednesday. It was the third straight trading day of net zero
injection/drain.
     YUAN: The yuan fell against the U.S. dollar after the People's Bank of
China set a weaker daily fixing. The yuan was last at 6.6015 against the U.S.
unit, compared with the official closing price of 6.5949 on Tuesday. The PBOC
set the yuan central parity rate against the U.S. dollar at 6.6011 on Wednesday,
weaker than Tuesday's 6.5944.
     BONDS: The yield on benchmark 10-year China government bonds was last at
3.9600%, up from the previous close of 3.9565%, according to Wind, a financial
data provider.
     STOCKS: Stocks were up, led higher by shares of real estate companies. The
benchmark Shanghai Composite Index closed up 0.13% at 3,337.86. Hong Kong's Hang
Seng Index was 0.09% lower at 29,655.58.
     FROM THE PRESS: China should set its GDP growth target at a lower rate than
last year's 6.5%, to allow the country to pursue more structural reforms, Bai
Chongen, a member of the Monetary Policy Committee of the People's Bank of
China, said at the Caijing Annual Conference on Tuesday, the Economic
Information Daily reported Wednesday. China's economy only needs to expand by an
average of 6.3% to realize its target of doubling the size of the economy
between 2010 and 2020, Bai said. (Economic Information Daily)
     China should boost lending and other financial services for the
construction of rental properties to help advance its policy of supply-side
reform of the housing sector, the China Securities Journal said in a commentary
Wednesday. While a dozen pilot projects have been introduced in cities including
Guangzhou, Shenzhen and Beijing, the rental housing industry is still too weak
and lacks sufficient financial backing, the commentary said. The size of China's
rental property market is CNY1.1 trillion, or only 7% of total property
transactions, compared with a ratio of more than 40% in more mature markets like
the U.S. and Japan, the commentary said. There should be more involvement by
commercial banks and real estate investment trusts, it said. (China Securities
Journal)
     Nine Chinese provinces will begin collecting water resource taxes to help
conserve water and curb unreasonable usage, the People's Daily reported on
Wednesday. Starting Dec. 1, provinces including Beijing, Henan and Shandong will
levy higher taxes on ground aquifers, on areas where water resources are
depleted, and on amounts that exceed allotments, the daily said. (People's
Daily)
--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com
--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]

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