MNI China Daily Summary: Wednesday, October 24

     TOP NEWS: Moves by the People's Bank of China to cut commercial lending

rates to small firms are welcome but it needs to relax some controls on shadow

banking to prompt more private capital to flow into a slowing real economy, a

former PBOC official told MNI in an interview. "The ample liquidity and low-cost

capital in the interbank market have not flowed to the real economy," said Sheng

Songcheng, a former head of the PBOC's statistics and analysis department and

now a counsellor to the Shanghai government.

     POLICY: There is a "50% to 70% chance" of a bilateral meeting between

Chinese President Xi Jinping and U.S. President Donald Trump at the G20 Summit

in Argentina next month, a researcher at China's top planning body told MNI in

an interview. The meeting, if it goes ahead, would be the first between the two

since late last year, before Trump authorized punitive tariffs which so far

cover $250 billion in imports from China. It would send too negative a message

if the leaders of the two largest economies were to miss an opportunity for

dialogue in Buenos Aires, said Wang Haifeng, Director of International Trade and

Investment at the Chinese Academy of Macroeconomic Research, run by the National

Development and Reform Commission.

     LIQUIDITY: The PBOC injected CNY150 billion via seven-day reverse repos

Wednesday, the fourth consecutive day of net injections. With no reverse repos

maturing, the move resulted in a net liquidity injection of CNY150 billion,

according to Wind Information. The 7-day weighted average interbank repo average

rate for depository institutions (DR007) decreased to 2.5944% from Tuesday's

close of 2.6085%, Wind Information showed. The overnight repo average fell to

2.3757% from Tuesday's 2.4328.

     YUAN: The yuan depreciated to 6.9410 against the U.S. dollar from Tuesday's

close of 6.9374. The PBOC set the yuan central parity rate weaker on Wednesday

at 6.9357 compared with Tuesday's 6.9338.

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

3.54%, down from the closing price of 3.57% on Tuesday, according to Wind

Information.

     STOCKS: The benchmark Shanghai Composite Index closed 0.33% higher at

2,603.30. Hong Kong's Hang Seng Index fell 0.41% to 25241.96.

     FROM THE PRESS: China's economy continues to operate at a reasonable level,

with no need for great concern, the People's Daily said Wednesday, downplaying

the headwinds weighing on growth. There is an increasing downward pressure on

China's industrial development amid the current turmoil, a Ministry of Industry

and Information Technology spokesman said Tuesday. Sluggish global growth,

volatile global financial markets, the pain of China's structural reform and the

escalating Sino-US trade spat have all weighed on the economy, said Xin Guobin,

deputy Minister of Industry and Information Technology. But China is confident

in can withstand the headwinds via its large market and its support for

industrial production, Xin added. (Link to the story: http://suo.im/51PamQ)

     The proposed "triangular support framework" recently put forward by the

State Council's Financial Stability Development Committee will focus on the

policy goal of stabilizing growth and eliminating financial risks, said Huang

Yiping, vice president of the National Development Research Institute of Peking

University, in an interview with The Paper. Huang, who is also chairman of the

China Finance 40 Forum's academic committee, laid out that the implementation of

a prudent and neutral monetary policy is a signal, aiming to reduce market

expectation of further loose monetary policy. (Link to the story:

http://suo.im/4wZUll)

     Several Chinese local governments, including Shenzhen, Beijing and

Jiangmen, have put forward measures to provide liquidity for listed companies

amid the recent market turbulence, the Securities Daily reported on Wednesday.

The total amount of funds available are expected to reach hundreds of billions

of yuan, the paper said. (Link to the story: http://suo.im/4Tyn80)

--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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