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     TOP NEWS: U.S. President Donald Trump said in a tweet on Monday that "China
has agreed to reduce and remove tariffs on cars coming into China from the U.S.
Currently the tariff is 40%." Chinese authorities have not responded. Earlier in
August, China slapped 25% tariffs on $16 billion worth of U.S. goods including
vehicles such as passenger cars and motorcycles, though it has cut tariffs on
car imports from the rest of the world to 15% from 25%.
     POLICY: The People's Bank of China(PBOC) provided Medium-term Lending
Facilities (MLF) totaling CNY403.5 billion on Monday, with a term of one year
and an interest rate of 3.30%, according to a statement on its website. The PBOC
said this was to keep the liquidity in the banking system at a reasonable and
ample level, and to meet the liquidity needs of financial institutions. The MLF
balance in the middle of November was CNY4.931 trillion.
     DATA: The Caixin China manufacturing Purchasing Managers Index (PMI) which
focuses on small and medium-sized manufacturers not surveyed by the official PMI
rose 0.1 to 50.2 in November from October, hovering just above the 50 level that
marks the level between contraction and expansion, signaling continued
stagnation of factory activities.
     USDCNY: The yuan appreciated to 6.8845 against the U.S. dollar from
Friday's close of 6.9436. The PBOC set the dollar/yuan central parity rate at
6.9431 Monday, higher than last Friday's 6.9357.
     USDCNH: The yuan has extended its recovery to send USDCNH to fresh daily
lows at 6.8795, with the pair dropping about 1% on the day. The resumption of
yuan strength follows the major rally in equity markets.
     STOCKS: The benchmark Shanghai Composite Index closed 2.57% higher at
2,654.80. Hong Kong's Hang Seng Index increased 2.55% to 27,182.04.
     LIQUIDITY: The PBOC skipped open market operations (OMOs) for a 27th
straight trading day Monday, leaving liquidity unchanged as no reverse repos
mature, according to Wind Information. The central bank said total liquidity in
the banking system remains at a relatively high level.
     RATE: The 7-day weighted average interbank repo rate for depository
institutions (DR007) decreased to 2.5885% from Friday's close of 2.6778%, Wind
Information showed. The overnight repo average decreased to 2.4911% from
Friday's 2.6286%.
     BONDS: The yield on the benchmark 10-year China Government Bond was last at
3.3700%, down from the closing price of 3.3750% on Friday, according to Wind
     FROM THE PRESS: Although China and the U.S. have agreed a 90-day trade war
ceasefire, Beijing can't yet count on the war's being over and still faces a
long haul, Xiake Dao, an online publication run by the People's Daily, said in a
commentary piece on Sunday night. China must still be on guard against extreme
situations, such as the U.S. imposing more tariffs on all Chinese exported goods
if its domestic economy worsens, the article said.(Link to the story:
     If trade friction between the U.S. and China is removed, there is no need
for a substantial easing in China's monetary and housing policies, reported Monday, citing analysts from Everbright Securities.
For the first three quarters, slowing overseas demand dragged Chinese GDP growth
lower by 0.7 percentage points. If the current CNY200 billion of tariffs is not
increased, the potential impact on the furniture, electronics, machinery and
other sectors will be significantly reduced or delayed, the article said, citing
analysts from CICC. (Link to the story:
     China's companies are finding the CNY1.3 trillion in recent tax cuts not as
attractive as they might appear on the surface, China Business News said Monday,
citing Liu Shangxi, dean of the Chinese Academy of Fiscal Science. Due to the
tax collection department's lack of capacity and taxpayers' failure to comply
with tax laws, there remains a gap between what tax businesses should pay and
what it actually pays, the report said, citing Liu. Hu Yijian, professor at
Shanghai University of Finance and Economics suggests that the government should
focus on substantial tax cuts, rather than lowering the nominal rate, the report
added. (Link to the story:
--MNI Beijing Bureau; +86 (10) 8532-5998; email:
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[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]

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