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POLICY: Chinese President Xi Jinping and U.S. counterpart Joe Biden spoke on the phone for a candid, in-depth and extensive strategic communication on Sino-U.S. relations and issues of mutual concern, state media Xinhua News Agency reported on Friday. This is the second call between the two leaders after one in February after Biden took the stage.

POLICY: China officially launched the long-awaited cross-border Wealth Management Connect pilot scheme Friday, according to a statement on the People's Bank of China website, and will now look to continue supporting the construction of the Guangdong-Hong Kong-Macao Greater Bay Area, promoting the innovative opening up of the domestic financial market in key regions, said Pan Gongsheng, PBOC Deputy Governor at the launch ceremony.

POLICY: China and the EU should actively expand the areas of cooperation and reduce frictions through dialogues, instead of threatening with sanctions, said Sun Yongfu, former director of the European Affairs Department of the Ministry of Commerce during the Taihe Civilizations Forum in Beijing.

DATA: China's M2 money supply growth slowed to 8.2% y/y in August, a three-month low, data released by the PBOC showed, decelerating from July's 8.3% y/y, missing the median forecast of 8.4% growth. Aggregate financing more than doubled to CNY2.96 trillion from the previous CNY1.06 trillion, beating the median forecast of CNY2.8 trillion. New loans also doubled to CNY2.12 trillion from July's CNY1.08 trillion, outshining the median forecast of CNY1.4 trillion.

LIQUIDITY: The PBOC injected CNY10 billion via 7-day reverse repos with the rate unchanged at 2.2%. The operation left liquidity unchanged given it netted off CNY10 billion reverse repos maturing today, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.1761% from the close of 2.1553% on Thursday, Wind Information showed. The overnight repo average rose to 2.1022% from the previous 2.0322%.

YUAN: The currency strengthened to 6.4408 against the dollar from 6.4572 on Thursday. The PBOC set the dollar-yuan central parity rate slightly lower at 6.4566, compared with the 6.4615 set on Thursday.

BONDS: The yield on the 10-year China Government Bond was last at 2.8625%, down from Thursday's close of 2.8700%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.27% to 3,703.11, while the CSI300 gained 0.88% to 5,013.52. The Hong Kong's Hang Seng Index rallied 1.91% to 26,205.91.

FROM THE PRESS: The PBOC is still likely to reduce lenders' reserve requirement ratios to add liquidity, though it may not cut interest rates this year, as the economy is at a reasonable growth range, the Securities Times reported citing analysts. The real interest rate excluding inflation is historically low, and the two-year average GDP in Q3 and Q4 is expected to be around 5.5%, which is close to the potential economic growth rate, the newspaper said citing Wu Chaoming, chief economist at Chasing Securities. PPI, which soared to a 13-year-high of 9.5% in August, is likely to decline by year-end as the basis of comparison rise, and monetary policy should focus on stability without overreacting to prices, the newspaper said citing Wang Jingwen, senior researcher at Minsheng Bank.

China's new yuan loans in August may rise to CNY1.3-1.4 trillion from CNY1.08 trillion in July as the PBOC promotes reasonable growth in loan scale, while the aggregate financing may rise to CNY2.5-3 trillion from the previous CNY1.06 trillion, the Securities Daily reported citing analysts. M2 may continue to slow to 8.2% y/y from July's 8.3%, considering the low growth rate of aggregate financing, the newspaper said citing Zhang Yu, chief analysts at Huachuang Securities. M1 may also decelerate to around 4.4% y/y, due to the rapid decline in real estate sales and the contraction of off-balance-sheet financing, the newspaper cited Zhang as saying.

The Taliban plans to invite high-level delegations from China and Russia to Afghanistan, and hopes its own delegation can visit Beijing and Moscow, the Global Times reported citing an interview with spokesman Suhail Shaheen. The Taliban's forces will continue to provide security to the Chinese embassy in Kabul around the clock, Shaheen was cited as saying. The group was in contact with Chinese diplomats when its forces first entered Kabul, the newspaper said citing Shaheen. Shaheen dismissed the criticism of the Taliban's interim government that it is seen as not inclusive and does not represent the diverse ethnic groups in the country, according to the newspaper. The appointment of ministers at this time is to fill the vacuum, many vacant positions will be filled and changes and adjustments are possible before the formal government is set up, the newspaper said citing Shaheeen.

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