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     BEIJING (MNI) - EXCLUSIVE: China and the U.S. are likely to sign a
'phase-one' preliminary trade deal this year as the two sides negotiate rolling
back tariffs on Chinese goods, although U.S. legislation expressing support for
protests in Hong Kong could cast a shadow over later-stage trade talks, a
Chinese former vice commerce minister told MNI in an interview. "I am optimistic
that the phase one deal could be done by the end of the year, " said Wei
Jianguo, now vice chairman of the China Center for International Economic
Exchange, a state-backed think tank, adding that compromises had been achieved
on substantive issues, leaving mainly smaller details still to be agreed.
     POLICY: China is likely to tolerate a slower growth rate next year after it
revised up its performance in 2018, reaching its goal of becoming a "moderately
prosperous society by 2020" without significant pressure, said Li Yang, the
chairman of the National Institution for Finance & Development, a
government-recognized think tank.
     LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations
for the eighth day, leaving liquidity unchanged as no reverse repos mature
today, according to Wind Information. The total liquidity in the banking system
is reasonable and ample, the PBOC said.
     RATES: The seven-day weighted average interbank repo rate for depository
institutions (DR007) fell to 2.5765% from Thursday's close of 2.5962%, Wind
Information showed. The overnight repo average increased to 2.3586% from
Thursday's 2.0609%.
     YUAN: The currency strengthened to 7.0261 against the dollar from
Thursday's close of 7.0328. PBOC set the dollar-yuan central parity rate higher
at 7.0298, compared with Thursday's 7.0271.
     BONDS: The yield on 10-year China Government Bonds was last at 3.1725%,
down from Thursday's close of 3.1750%, according to Wind Information.
     STOCKS: The Shanghai Composite Index trimmed 0.61% to 2,871.98, as liquor
and consumer shares lost. Hong Kong's Hang Seng Index tumbled 2.03% to
26,346.49.
     FROM THE PRESS: China may issue as much as CNY820 billion special purpose
bonds in Q1, CNY154 billion more than the same period in 2019, with about 70%
proceeds to be used in infrastructure projects, the Securities Daily reported
citing Zhu Jianfang, the chief economist at Citic Securities.  
     China's Financial Stability and Development Committee reemphasized its
support for boosting banks' capital in a meeting on Thursday, as non-performing
loans and credit demand by the real economy increase, the official newspaper
Securities Times reported. The regulator called for stabilizing growth and
managing risk, the newspaper said.
     China's home mortgage rates were not impacted by the central bank's cut in
5-year new benchmark lending rate last week, the 21st Century Business Herald
reported citing the Rong 360 Big Data Institute. The average interest rate for
first home mortgages stood at 5.53% in November, 1 bp higher than the previous
month. PBOC trimmed 5-year LPR by 5 bps to 4.80% last Thursday.
     A slowing growth in the PBOC's balance sheet doesn't indicate a tightened
stance, as market liquidity is currently adequate, Dong Ximiao, a researcher
with the National Institution for Finance & Development wrote in the Economic
Daily. 
--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$$$]