MNI China Daily Summary: Thursday, December 5

     POLICY: China and the U.S. are maintaining close communication, Ministry of

Commerce spokesman Gao Feng said at a regular briefing on Thursday. Gao also

reiterated that a phase-one deal with the U.S. needs to include a commitment to

removing some extra tariffs imposed since last year. China has shown its

opposition on the U.S. passing Hong Kong and Xinjiang-related bills, Gao said

without elaborating, when asked whether China will retaliate by publishing a

list of "non-reliable entities" hitting American companies. 

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

for the 12th day, leaving liquidity unchanged with no reverse repos maturing

today, according to Wind Information. Liquidity in the banking system is

"reasonable and ample" enough to offset banks' payment of required reserves and

the issuance of government bonds, the PBOC said on its website.

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

institutions (DR007) rose to 2.3142% from Wednesday's close at 2.2065%, Wind

Information showed. The overnight repo average fell to 1.9024% from 1.9575%. 

     YUAN: The yuan strengthened to 7.0425 against the dollar from Wednesday's

close of 7.0699. PBOC set the dollar-yuan central parity rate higher for a

second day at 7.0521, compared with Wednesday's 7.0382. 

     BONDS: The yield on 10-year China Government Bond was last at 3.1875%, down

from the close of 3.1925% on Wednesday, according to Wind Information.

     STOCKS: The benchmark Shanghai Composite Index gained 0.74% to 2,899.47,

led by technology shares. Hong Kong's Hang Seng Index increased 0.59% to

26,217.04.

     FROM THE PRESS: China should prioritize and boost employment by expanding

consumption and stabilising imports and exports, according to the summary of the

weekly State Council meeting chaired by Premier Li Keqiang held yesterday,

carried by Xinhua News Agency. Local governments should lower the threshold for

small companies obtaining entrepreneurial loan guarantees, and provide funding

support for migrant workers setting up businesses in their hometowns, Xinhua

reported.

     The prices of China's industrial products may begin to recover in Q4 helped

by the slowly improving demand in both the domestic and overseas markets, the

Securities Times said in a commentary. Investment in high-tech manufacturing

continues to grow in recent months, as manufacturers in electronic, equipment,

medicine and instrumentation add R&D spending after the U.S restricted China's

access to its technology, the newspaper said citing a report by Industrial

Securities. The early issuance of local government special bonds targeted at

boosting investment in infrastructure and the stabilizing U.S. economy will help

exports, the newspaper 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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