Trial now
     BEIJING (MNI) - EXCLUSIVE: The yuan should draw added strength from the
signing of the U.S.-China trade deal, which calls for the continued development
of financial markets, former Chinese officials and senior advisors told MNI
Thursday. The deal will help China increase the transparency of the yuan forex
formation mechanism, said Sheng Songchen, former director of the statistics and
analysis department at the People's Bank of China (PBOC), while a commitment to
allow asset managers to make purchases of Chinese non-performing loans should
bring in foreign expertise and capital as the country stabilises debt levels,
assisting the PBOC's risk prevention task.
     EXCLUSIVE: China should be able to meet targets under its phase one trade
deal over the next two years, market conditions allowing, government advisors
told MNI, but they cautioned that the agreement's dispute resolution mechanism
could contain the seeds of its collapse and that its longer-term targets for
growth in trade may be unrealistic.
     DATA: China's Q4 GDP expanded 6.0% y/y, with full-year growth registering
6.1%, the lowest level since 1990. It was at the low end of the 6-6.5% range
targeted by the government at the beginning of the year. 
     DATA: Industrial output expanded 6.9% y/y in Dec from 6.2% in Nov, the
highest in nine months and beating projected 5.8%. Retail sales rose 8% y/y,
flat from Nov and higher than 7.8% forecast. Fixed-asset Investment recorded
5.4% in full-year 2019, stronger than 5.2% in Jan-Nov and the 5.2% median
forecast.
     POLICY: China achieved its major economic goal for 2019, with stable growth
despite "obvious domestic and external challenges", though challenges remain,
said Ning Jizhe, the head of the National Bureau of Statistics on Friday. China
will keep the economy on track, ensuring a "reasonable range" of growth with
countercyclical measures, Ning said.
     LIQUIDITY: The PBOC injected a net of CNY200 billion via 14-day reverse
repos with the rate unchanged at 2.65%, according to a statement on PBOC
website. The injection aims to offset the peak demand for cash and payments for
government bonds, and keep the liquidity in the banking system at a reasonable
and ample level before Chinese New Year, PBOC said.
     RATES: The seven-day weighted average interbank repo rate for depository
institutions (DR007) decreased to 2.6338% from Thursday's close of 2.6907%, Wind
Information showed. The overnight repo average fell to 2.5200% from Thursday's
2.6130%.
     YUAN: The currency strengthened to 6.8585 against the dollar from
Thursday's 6.8850 close. PBOC set the dollar-yuan central parity rate higher for
the first time in six trading days at 6.8878, compared with 6.8807 on Thursday.
     BONDS: The yield on 10-year China Government Bonds was last at 3.1100%,
down from Thursday's 3.1205, according to Wind Information.
     STOCKS: The Shanghai Composite Index edged up 0.05% to 3,075.50. Hong
Kong's Hang Seng Index gained 0.60% to 29,056.42.
     FROM THE PRESS: China is expected to lower the reserve requirement ratio by
50 bps in 2020, the Beijing Business Today reported citing Wen Bin, chief
analyst at China Minsheng Bank. China will keep the rate of medium-term lending
facility unchanged due to inflation pressures, while the market-oriented Loan
Prime Rate, used by banks to price loans, is expected to be cut by 5bps in
January, the newspaper said.
     Several eastern Chinese provinces set GDP growth targets "around 6%" for
2020, indicating that the national growth target should adopt the same wording,
the 21st Century Business Herald reported citing Sheng Laiyun, deputy head of
the National Bureau of Statistics. Research by various experts showed that
China's potential economic growth rate is around 6%, the newspaper added.
     The inclusion of Chinese government and local government bonds into
calculations of total social financing (TSF) can better support the coordination
of monetary and fiscal policies, the People's Daily reported citing Ruan
Jianhong, director of the Financial Survey and Statistics Department at PBOC.
Current liquidity in the banking system is reasonable and abundant, financial
data is generally better and structures are optimized, the daily cited Ruan as
saying.
--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
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]