MNI China Daily Summary: Wednesday, September 18

     POLICY: The National Development and Reform Commission (NDRC), China's top

planner, will support pig breeding and sell pork from reserves to ease soaring

prices and cool inflation, a spokeswoman Meng Wei said at a briefing today. The

NDRC, responsible for checking prices, will ensure food costs under control next

month when the country celebrates its 70th anniversary of founding in a

week-long holiday. 

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

7-day reverse repos, leaving the liquidity unchanged as CNY30 billion in reverse

repos matured today, according to Wind Information.

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

institutions (DR007) rose to 2.6608% from Tuesday's close of 2.6102%, Wind

Information showed. The overnight repo average rose to 2.6403% from Tuesday's

2.5715%.

     YUAN: Dollar-yuan closed at 7.0879 compared with 7.0929 yesterday. The PBOC

set the dollar-yuan central parity rate lower at 7.0728, compared with 7.0730 on

Tuesday.

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

3.1200%, up from 3.1025% on Tuesday, according to Wind Information.

     STOCKS: The benchmark Shanghai Composite Index rose 0.25% to 2,985.66. Hong

Kong's Hang Seng Index edged down 0.13% to 26,754.12.

     FROM THE PRESS: Any further easing in China's monetary policy may be

restrained by the upward CPI and  imperfect credit transmission mechanism, the

Shanghai Securities News said citing market participants. The liquidity released

by the earlier reserve requirement ratio cut and the renewal of CNY200 billion

of medium-term lending facility is reasonable and ample, the newspaper said

citing the unidentified people. 

     The PBOC is more likely to cut interest rates in November than in

September, the Securities Times reported citing Zhang Yu, chief analyst at

Huachuang Securities. The PBOC may lower the rate of medium-term lending

facility (MLF) on November 5 when some MLF is set to mature, the newspaper

predicted. The pricing of the loan prime rate (LPR) in September and October may

also affect the central bank's rate cut decision, the newspaper said, adding

that the market is expecting a lower LPR this month. 

     Reduced revenue from tax cuts is both expected and affordable for Chinese

authorities, the Economic Daily reported citing Bai Jingming, a deputy director

of the Chinese Academy of Fiscal Sciences. The cuts have promoted economic

growth and boosted the tax base, which will have a positive impact on the fiscal

balance in the long run, the newspaper said. National fiscal revenue grew 3.2%

y/y in the first eight months, slowing by 6.2 percentage points from same period

last year, the newspaper added. 

--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

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