MNI China Daily Summary: Monday, December 24

     TOP NEWS: China will cut import taxes on 706 goods from Jan 1, and scrap

export tariffs on 94 items of products, including fertilizers, iron ore, coal

tar, and wood pulp, according to an announcement on the website of the finance

ministry today.

     TRADE WAR: China and the U.S. made progress after holding  vice-minister

rank dialogue on Sunday to exchange views on issues of mutual concerns,

including trade balance and strengthening intellectual property protection, the

Ministry of Commerce said in a statement on its website. The two sides also

discussed the arrangements for the next call and mutual visits, the ministry

said.

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

14-day reverse repos today, a sixth straight trading day that the central bank

has added liquidity by open market operations(OMOs). It resulted in a net drain

of CNY140 billion today due to the maturity of CNY160 billion of reverse repos,

according to Wind Information. The OMO is to offset the issuance of government

bonds and other factors, the central bank said.

     RATE: The 7-day weighted average interbank repo rate for depository

institutions (DR007) increased to 2.6290% from Friday's close of 2.5800%, Wind

data showed. The overnight repo average decreased to 2.2639% from Friday's

2.4514%.

     Yuan: The yuan depreciated to 6.8965 against the U.S. dollar from Friday's

close of 6.9019. The PBOC set the dollar/yuan central parity rate at 6.9006

today, compared with 6.8825 on Friday.

     STOCKS: The benchmark Shanghai Composite Index fell 0.43% to 2,527.01. Hong

Kong's Hang Seng Index decreased 0.40% to 25,651.38.

     BONDS: The yield on the benchmark 10-year China Government Bond was last at

3.3525%, up from the closing price of 3.3150% on Friday, according to Wind

Information.

     FROM THE PRESS: China's draft foreign investment law stipulates that

Chinese authorities shall not force foreign investors to transfer technology by

administrative means, Xinhua News Agency reported on Sunday. The new law will

encourage technical cooperation on a voluntary basis, and protect the

intellectual property rights of foreign enterprises investing in China, Xinhua

said.

     China must keep macroeconomic control at an appropriate level and not let

it be too rigid or loose, Wallstreetcn reported on Saturday citing Han Wenxiu,

deputy director of the General Office of the Leading Group for Financial and

Economic Affairs of China. Han also pointed out that China's total GDP in 2018

is expected to exceed CNY90 trillion, or about US$13.7 trillion, with GDP per

capita at US$9,990. The total new jobs created this year was 13 million, with

urban unemployment rate below 5%, Han was cited as saying.

     China should temporarily let the deficit exceed the 3% ratio of the GDP to

stabilize economic growth, said China Business News on Sunday citing Huang

Yiping, a member of the PBOC's Monetary Policy Committee. The health of the

balance sheet is more important than the deficit ratio, Huang was reported as

saying. The balance sheet of the central government is healthy, but that of

local government is not, the newspaper reported Huang 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

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