MNI China Daily Summary: Monday, December 9

     EXCLUSIVE: Policy advisors expect China to signal a more expansionary

fiscal policy later this month to keep economic growth at 6% or more in 2020,

including a boost to infrastructure spending to power a new drive for regional

development, they told MNI. "The deficit ratio and quotas for the issuance of

government special-purpose bonds will continue to increase. This means the

government will pursue a more expansionary fiscal policy," said Tang Duoduo,

Deputy Director of Macro-Economy Research at the Chinese Academy of Social

Sciences, a research institute overseen by the State Council.

     POLICY: China shouldn't use stimulus to keep GDP growth above 6%, as doing

so would be at the expense of future growth and would places the economy at the

risk of a sharp correction, Liu Shijin, deputy director of the Economic

Committee of the Chinese People's Political Consultative Conference, said

Saturday. China's growth could fall by one percentage point in the next two

years, Liu said, noting it had now entered a new growth stage of 5%-6%, said

Liu, a member of the People's Bank of China monetary committee. The challenge of

managing the economy will be even greater next year as slowdown continues after

Q1.

     DATA: China's imports rose 0.3% y/y to $183.01 billion in November, the

first yearly increase in seven months, as the annual Double 11 online sales

campaign boosted demand for imported goods. Exports continued to fall 1.1% y/y

to $221.74 billion, faster than last month's 0.9% y/y drop, data from the

customs administration released on Sunday showed.

     DATA: China FX reserves fell for the first time in four months, by $9.6

billion in Nov from $3.1052 trillion in Oct, data by the State Administration of

Foreign Exchange (SAFE) on Saturday showed. The decrease was due to a slight

rise of the dollar index and falling prices of major government bonds, according

to SAFE. Reserves rose $22.9 billion, or 0.7%, from the beginning of this year,

SAFE said. The yuan gained 0.13% against the U.S. dollar in Nov, Wind data

showed. 

     LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations

for the 14th day, leaving liquidity unchanged, according to Wind Information.

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) rose to 2.4510% from Friday's close of 2.3678%, Wind

Information showed. The overnight repo average increased to 2.3243% from

Friday's 2.0647%.

     YUAN: The yuan weakened to 7.0403 against the U.S. dollar from Friday's

close of 7.0340. PBOC set the dollar-yuan central parity rate higher at 7.0405,

compared with Friday's 7.0383.

     BONDS: The yield on 10-year China Government Bond was last at 3.2000%, down

from Friday's close of 3.2025%, according to Wind Information. 

     STOCKS: The Shanghai Composite Index gained 0.08% to 2,914.48. Hang Seng

Index edged down 0.01% to 26,494.73. 

     FROM THE PRESS: Fixed asset investment in China may rise by 3-4% percentage

points under a series of policy measures to stabilize growth, the Security Daily

reported citing Wang Qing, chief macroeconomic analyst at credit rating agency

Dongfang Jincheng. Reductions on taxes and fees may be maintained next year to

reverse stalling profits in the manufacturing sector. Fixed asset investment

grew by 5.2% y/y in the period Jan-Oct this year.

     The PBOC is likely to roll over the maturity of CNY286 billion of

medium-term lending facility (MLF) next Monday and use MLF to add more

liquidity, the Securities Daily reported citing Yan Se, chief economist at

Founder Securities. The PBOC is less likely to cut the reserve requirement

ration (RRR) in December, but may do so in January, as the market will see more

special purpose bond issuance by local government authorities in January, and

bank lending should also move higher by then, the daily reported Yan as saying.

     China's 2020 economic policies must serve goals set in the 13th Five-Year

Plan, according to a commentary published by the Economic Information Daily. A

key focus of economic policy next year will be making better use of

macroeconomic policies and counter-cyclical adjustment tools, the daily said.

--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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