MNI China Daily Summary: Wednesday, September 25

     DATA: MNI's Liquidity Conditions Index declined to 57.1 in September after

registering 65.4 last month, indicating moderately improved conditions. The

higher the index, the tighter liquidity appears to market participants.

     LIQUIDITY: The People's Bank of China (PBOC) injected CNY20 billion via

14-day reverse repos. This resulted in a net drain of CNY10 billion given the

maturity of CNY30 billion of reverse repos, according to Wind Information.

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

institutions (DR007) decreased to 2.4176% from Tuesday's close of 2.6040%, Wind

Information showed. The overnight repo average fell to 2.0152% from Tuesday's

2.3484%. 

     YUAN: The yuan weakened to 7.1238 against the dollar from Tuesday's close

of 7.1075. The PBOC set the dollar-yuan central parity rate slightly stronger to

7.0724 from 7.0729 on Tuesday.

     BONDS: The yield on 10-year China Government Bonds was last at 3.1125%,

down from the close of 3.1175% on Tuesday, according to Wind Information. 

     STOCKS: The Shanghai Composite Index fell 1.00% to 2,955.43. Hong Kong's

Hang Seng Index tumbled 1.28% to 25,945.35. 

     FROM THE PRESS: China will exempt Chinese importers from paying extra

tariffs on purchases of American agricultural products including soybeans and

pork, Xinhua News Agency reported late Tuesday. China is a large market for

imported high-quality American farm goods, and the government hopes the U.S. can

work with China to create favorable conditions in the agricultural and other

areas of cooperation, Xinhua said.

     It is unrealistic to expect China and the U.S. to end their relationships

as the two countries have become each other's most important trading partners

and their supply chains are deeply integrated, Minister of Foreign Affairs Wang

Yi said in a statement carried on the ministry's website. 

     China's package of value-added tax reform will buoy GDP growth by 0.181%

this year, create 217,400 jobs, and boost household consumption by 1.413%,

according to the State Taxation Administration. In a statement published on its

website, the agency cited a report by the Shanghai University of Finance and

Economics as saying the VAT tax cut will continue to boost GDP over the next

three years by a total 0.362%.

--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

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

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