MNI China Daily Summary: Thursday, Aug. 6

EXCLUSIVE: China is unlikely to try renegotiating aspects of the 'phase one' trade deal with the U.S. when officials from the two countries meet later this month, as Beijing accept President Donald Trump will dismiss any such requests under the current strained relations between the two countries, government sources and policy advisors told MNI."China is unlikely to propose re-negotiating the purchase figures in the deal as it knows Trump won't agree," said Shi Yinhong, a U.S.-China relationship expert at Renmin University and an advisor to the current cabinet, pointing to the fact that the U.S. President needed a strong deal to boost his reelection credentials.

POLICY: China will support private investment including improved access to capital raising and participation in public health projects as part of economic recovery measures for the second half of 2020, Ning Jizhe, a vice chairman of the National Development and Reform Commission, told the official People's Daily. The government would adhere to Chairman Xi Jinping's guidance and remove barriers and red tape for investment as a measure to stem the decline in private capital seen in H1, Ning told the Daily.

LIQUIDITY: The People's Bank of China (PBOC) skipped its 7-day reverse repo operations on Thursday for a fourth day, draining a net of CNY50 billion as the same amount of repos matured today, according to Wind Information.The total liquidity in the banking system is at a reasonable and ample level, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) slightly increased to 2.0179% from Wednesday's close of 2.0164%, Wind Information showed. The overnight repo average fell to 1.6634% from 1.6697% on Wednesday.

YUAN: The currency strengthened to 6.9441 against the dollar from Wednesday's close of 6.9530. The PBOC set the dollar-yuan central parity rate lower at 6.9438, compared with Wednesday's 6.9752.

BONDS: The yield on 10-year China Government Bonds was last at 2.9775%, up from Wednesday's close of 2.9750%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.26% to 3,386.46, while the CSI300 index decreased 0.30% to 4762.76. The Hong Kong's Hang Seng Index down 0.69% to 24930.58.

FROM THE PRESS: This month's scheduled meeting between China's Vice Premier Liu He and U.S. Trade Representative Robert Lighthizer, if it goes ahead, will offer an opportunity for the two to mend their deteriorating relationship, Cui Tiankai, China's ambassador to the United States told China Daily. China has urged the United States to amend the damage caused by its confrontational attitude and focus on economic recovery from the on-going pandemic, Cui said. He also said that China is willing to coordinate on macroeconomic policies with the world.

China's July CPI is forecast at 2.7% before peaking in August as vegetable prices climbed due to flooding in southern China, the Economic Information Daily reported citing Hua Changchun, the chief Economist with Guotai Junan Securities. June CPI is expected to move higher after 2.5% in June. Pork prices were also likely to have contributed to higher inflation in July since the resumption of restaurant sales drove demand, the Daily said citing Zhang Jiqiang, the deputy head of the research department with Huatai Securities. China publishes July CPI data next Monday.

China's August auto sales are likely to rise from July as vendors discount vehicles and newly introduced products spur demand, the Shanghai Securities News reported citing the China Automobile Dealers Association. July car sales rose 14.9% y/y, but were down 9.6% m/m, and sales in the first seven months were down 12.7% to 12.3 million, the newspaper said citing Association data. About 40% of the dealers are currently unprofitable as they were forced to sell below cost to receive bonuses from manufacturers, and actual demand is below the volume of vehicles coming off assembly lines, the newspaper reported.