MNI China Daily Summary: Wednesday, September 11

     POLICY: China on Wednesday released two small lists of U.S.-exported

products exempted from extra tariffs imposed since the trade spat, sending a

positive signal as the two governments prepare for the upcoming trade talks.

Extra tariffs imposed on 12 items, including fishmeal, a feed ingredient, shrimp

seed and some pesticide chemicals, will be exempted retroactively with previous

collections refunded, according to a statement by the State Council's tariff

regulation committee, listed on the Ministry of Finance's website. Another four

items, including animal feed whey protein, will be exempted, though previously

collected amount won't be refunded. The effective period for both lists is one

year starting Sept 17, according to the statement.

     POLICY: China will lift key quota restrictions on the inflow of foreign

capital in a bid to attract overseas institutional investors, the State

Administration of Foreign Exchange said on Tuesday. Both the Qualified Foreign

Institutional Investor (QFII) and the RMB Qualified Foreign Institutional

Investor (RQFII) programs will be removed, meaning that licensed global

institutional investors will be able to invest in mainland bond and stock

markets without quota limits, SAFE .

     DATA: China M2 rose 8.2% y/y in August, up from 8.1%, which was both that

of July and MNI projection. Aggregate financing to the economy doubled to

CNY1.98 trillion from CNY1.01 trillion in July. New loans, totaled CNY1.21

trillion, up from CNY1.06 trillion in last month.

     LIQUIDITY: The People's Bank of China (PBOC) injected CNY30 billion via

7-day reverse repos, with no reverse repos maturing today, according to Wind

Information. 

     LIQUIDITY: The PBOC conducted CNY5 billion central bank bill swap (CBS) on

Wednesday to "enhance the market liquidity of bank perpetual bonds, support

banks recapitalization" via issuing perpetual bonds, and improve financial

services' support of the real economy, according to a PBOC statement. 

     RATES: The seven-day weighted average interbank repo rate for depository

institutions (DR007) rose to 2.6424% from Tuesday's close of 2.6212%, Wind

Information showed. The overnight repo average decreased to 2.4494% from

Tuesday's 2.5502%. 

     YUAN: The yuan weakened to 7.1179 against the dollar from Tuesday's close

of 7.1042. The PBOC set the dollar-yuan central parity rate lower at 7.0843,

compared with 7.0846 on Tuesday.

     BONDS: The yield on 10-year China Government Bonds was last at 3.0525%, up

from the close of 3.0425% on Tuesday, according to Wind Information. 

     STOCKS: The Shanghai Composite Index pared 0.41% to 3,008.81. Hong Kong's

Hang Seng Index edged up 1.78% to 27,159.06. 

     FROM THE PRESS: New measures to support commercial bank lending to

manufacturers and SMEs are expected soon, the Economic Information Daily

reported on Wednesday. The policies were to encourage banks to use more

innovative tools to supplement capital through multiple channels and structural

monetary policy tools will continue to be used to assist SMEs, the daily said.

     China is committed to creating an international market-oriented,

rule-of-law business environment and will continue to open its markets, Premier

Li Keqiang said during a meeting with U.S. representatives attending the

China-US Entrepreneurs' Dialogue, according to a broadcast by China Central

Television. China's manufacturing industry is fully liberalized and the opening

of the service industry is accelerating, Li said.

--MNI Beijing Bureau; tel: +86 (10) 8532-5998; email: flora.guo@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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