MNI China Daily Summary: Monday, January 21

     TOP NEWS: China's economy grew 6.6% y/y in 2018, the slowest pace since

1990, while GDP expanded 6.4% in the fourth quarter, the slowest in a decade,

according to data released today by the National Bureau of Statistics(NBS). One

brighter spot is industrial output rose 5.7% y/y in December, bouncing back from

10-year low of 5.4% in November, and beating the 5.4% forecast by economists

polled by MNI. FAI grew 5.9% y/y in 2018, meeting the 5.9% median forecast in an

MNI survey, and maintained the same pace as Jan-Nov. Retail sales improved to

8.2% y/y in December from a historical low 8.1% in November, beating the median

of 8.1% forecast in an MNI survey.

     POLICY: The targets for infrastructure spending can be expected to be

stronger this year. They will be important to help balance urban-rural

development, revitalize the countryside and bridge regional growth differences.

This will help boost consumption and increase rural spending. Transportation

systems linking the countryside, including major trunks, rail, roads and

subways, as well as public services such as access to hot water, are still

insufficient, lagging behind developed nations. China will also spend on hydro

projects and water supplies, Ning Jizhe, the head of the NBS said at a press

briefing in Beijing today.

     TRADE WAR: The on-going trade frictions with the U.S. have had some impact

on the Chinese economy, including trade and investment, according to the NBS

head Ning Jizhe. However, Ning said the two countries' negotiations on resolving

conflicts have had some positive progress.

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

(OMOs) today, resulting in a net drain of CNY80 billion -- the total of reverse

repos maturing today, according to Wind. The central bank said the current

liquidity in the banking system is at a reasonable and ample level.

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

institutions (DR007) increased to 2.5527% from Friday's close of 2.5472%, Wind

data showed. The overnight repo average increased to 2.2336% from Friday's

2.1623%.

     Yuan: The yuan depreciated to 6.7901 against the U.S. dollar from Friday's

close of 6.7706. The PBOC set the yuan's central parity rate against the dollar

at 6.7774 on Monday, compared with the 6.7665 on Friday. 

     STOCKS: The benchmark Shanghai Composite Index rose 0.56% to 2,610.51. Hong

Kong's Hang Seng Index increased 0.39% to 27,196.54.

     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: China's main priority in 2019 is to deepen the reform of

the financial system, as China maintaining an average growth rate of 6% in the

next three years depends and joining the rank of high-income country all depend

on it, Sina Finance reports, citing a report published by Li Daokui, a professor

at Tsinghua University School of Economics and Management. The excessive

tightening in the financial sector is the main reason China's economy underwent

another round of adjustment since mid-2018, with low confidence among private

and small companies and slowing GDP growth, Li was cited as saying.

     Nine provinces and cities across China have issued their key project

investment plans for 2019, totaling about CNY25 trillion, the Shanghai

Securities News reported. Traditional infrastructure projects including

railways, highways, airports, electricity, natural gas and water conservancy

projects, as well as major industrial and eco-environment protection projects

remain the main areas of investment, the newspaper said.

     China's economy has all the conditions to maintain steady growth in a

reasonable range, the People's Daily overseas edition said. A more precise macro

policy package, continuously improving infrastructure, 5 to 10 more years of

labor dividend and the process of urbanization will support the long-term

development of the economy ahead, the Daily said, citing Chen Wenling, chief

economist at China Center for International Economic Exchanges.

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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