MNI China Daily Summary: Monday, January 14

     TOP NEWS: China doubled the quota of its Qualified Foreign Institutional

Investors(QFII) program to $300 billion from $150 billion, aiming to meet

foreign investors' increasing appetite for Chinese capital market, said a

statement on the website of State Administration of Foreign Exchange.

     DATA: Exports in December fell 4.4% y/y to $351.76 billion, dropping

dramatically from the 5.4% gain recorded in November. Imports plunged 7.6% y/y

to $164.19 billion, ending a run of 25 consecutive months of gains, and marking

the lowest since July 2016, data released today by China's customs agency

showed. Exports for 2018 increased by 9.9% y/y to $2.49 trillion, while imports

were USD2.14 trillion, 15.8% higher than a year ago.

     DATA: Foreign direct investment (FDI) into China in December reversed the

downward trend and increased 24.9% on an annual basis to USD13.7 billion, data

by the Ministry of Commerce on Monday showed. That compared with the 27.6%

contraction to USD13.6 billion in November. FDI totaled record US$134.97 billion

in 2018, recording a 3% y/y, compared with 1.1% in Jan-Nov.

     LIQUIDITY: The People's Bank of China (PBOC) injected CNY80 billion via

7-day reverse repos, and CNY20 billion through 28-day reverse repos. The OMOs

resulted in a net injection of CNY20 billion given the maturity of CNY80 billion

of reverse repos, according to Wind Information. The PBOC said today's OMO is to

offset the taxation period, maturing reverse repos, the issuance of government

bonds and other factors.

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

institutions (DR007) increased to 2.5446% from Friday's close of 2.3825%, Wind

data showed. The overnight repo average increased to 1.8732% from Friday's

1.7037%.

     Yuan: The yuan depreciated to 6.7578 against the U.S. dollar from Friday's

close of 6.7482. The PBOC set the yuan's central parity rate against the dollar

at 6.7560 on Monday, with the Chinese currency strengthening from the 6.7909 set

last Friday. Today's parity is the strongest since Jul 19, 2018.

     STOCKS: The benchmark Shanghai Composite Index fell 0.71% to 2,535.77. Hong

Kong's Hang Seng Index decreased 1.38% to 26,298.33.

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

3.1400%, up from the closing of 3.1200% on Friday, according to Wind

Information.

     FROM THE PRESS: Several key catalogues of trade -- listing key areas for

service exports, encouraged areas of service imports, as well as restricted

technologies for import and export -- have been revised and will be released

soon, China Securities Journal reported today. China's new catalogues for

service export will add the digital economy, digital industries and

Internet-related industries, the paper reported, citing Li Jun, director of the

Institute for International Service Trade under the Ministry of Commerce.

     The downward pressure on the yuan in recent months has eased, and the

currency is likely to fluctuate in the future, Xinhua News Agency reported

Saturday, citing market analysts. According to Chen Kaifeng, the chief economist

at Forex Signs Financial Management, the recent appreciation of the yuan against

the greenback is due to the Fed slowing interest rate hikes, the weakening of

the dollar and the market's worries about the U.S. economic growth, Xinhua

reported.

     China's urban registered unemployment rate was 3.8% at the end of 2018, a

new low in recent years, with a general oversupply of job vacancies, Zhang

Jinan, Minister of Human Resources and Social Security said, CCTV News reported

Sunday. Stabilizing employment is the top priority of the government and it will

boost the economy. The Ministry will continue to put forward new policies to

promote employment, Zhang said, CCTV reported.

--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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