MNI China Daily Summary: Thursday, December 26

     BEIJING (MNI) - POLICY: China and the U.S. have been "closely

communicating" on issues related to signing the interim trade deal, spokesperson

Gao Feng of the Ministry of Commerce said on Thursday. The two countries are

performing necessary procedures including legal reviews, translations and

proofreading, Gao said at a regular Thursday briefing declining to comment

further when asked about Chinese purchases of American pork and soybeans.

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

operations, draining net CNY30 billion given the maturity of reverse repos,

according to Wind Information. Total liquidity in the banking system is

relatively high due to an increase in fiscal expenditures near the end of the

year, PBOC said.

     RATES: The seven-day weighted average interbank repo rate for depository

institutions (DR007) decreased to 2.3472% from 2.4346% on Wednesday, Wind

Information showed. The overnight repo average fell to 0.8382% from 0.9289% on

Wednesday.

     YUAN: The yuan weakened to 6.9984 against the dollar from 6.9823 on

Wednesday. PBOC set the dollar-yuan central parity rate lower at 6.9801 from

7.0067 on Wednesday.

     BONDS: The yield on 10-year China Government Bonds was last at 3.1400%,

down from the close of 3.1600% on Wednesday, according to Wind Information.

     STOCKS: The Shanghai Composite Index gained 0.85% to 3007.35 as shares of

securities companies advanced. The Hong Kong exchange is closed for Christmas. 

     FROM THE PRESS: Market participants are bullish on the Chinese Yuan and

expect the currency to trade below 7.0 against the dollar next year, the

Shanghai Securities News reported citing bank reports. Bank of China

International predicted USD-CNY to range 6.7 and 7.2 next year, according to the

newspaper.

     A total of CNY170.63 billion Chinese local government special-purpose bonds

may be issued in January, the Securities Daily reported. The issuances will

significantly boost infrastructure investment and create jobs in Q1, the

newspaper reported citing experts.

     Home prices in China may decline slightly next year while more

consolidations among developers can also be expected, the China Securities

Journal reported. The central government reiterated that it won't allow real

estate as a short-term economic stimulus tool, which further stabilizes market

outlook, said the journal citing Zou Linhua, a researcher at the Chinese Academy

of Social Sciences.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: archie.zhang@marketnews.com

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