MNI China Daily Summary: Friday, November 13

POLICY: China should strengthen research in multilateralism and multilateral institutions to drive China's influence in the global agenda and establish a rule-based international order, Zhou Xiaochuan, the former Governor of the People's Bank of China said in a speech at the 11th Caixin Summit on Friday. China should also be aware of the spillover effect of monetary and financial policies of other countries, said Zhou.

POLICY: China has congratulated Joe Biden and Kamala Harris on the outcome of the U.S. presidential election, although understanding the result must be confirmed by due process, said Wang Wenbin, spokesman of the Ministry of Foreign Affairs at a regular press briefing on Friday. "We have been following the reaction of the U.S. and the international community to the U.S. presidential elections, and we respect the choice of the American people," said Wang, when asked to comment that many foreign leaders and heads of international organization had congratulated Biden on his victory.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY160 billion via 7-day reverse repos with rates unchanged at 2.2% on Friday. This resulted in a net injection of CNY160 billion given no reverse repos matured today, according to Wind Information. The operations aim to maintain the liquidity in the banking system reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 2.6050% from close of 2.5829% on Thursday, Wind Information showed. The overnight repo average declined to 2.5456% from the previous 2.5649%.

YUAN: The currency strengthened to 6.6144 against the dollar from 6.6297 on Thursday. The PBOC set the dollar-yuan central parity rate higher at 6.6285 for a third day, compared with the 6.6236 set on Thursday.

BONDS: The yield on 10-year China Government Bond was last at 3.2550%, down from Thursday's 3.2600%, according to Wind Information.

STOCKS: The Shanghai Composite Index declined 0.86% to 3,310.10 while the CSI300 index decreased by 1.05% to 4856.85. Hang Seng Index edged down 0.05% to 26156.86.

FROM THE PRESS: China's monetary policies are not likely to be influenced by the near-zero inflation given that food prices rather than monetary contractions are driving the weak consumer prices, the Economic Daily reported on Friday citing Liu Xuezhi, a researcher from the Bank of Communications. Policymakers should focus on precise structural policies to further support the recovery of demand, the Daily reported citing Wen Ben, an analyst from China Minsheng Bank. The PBOC will use various interbank operations to maintain ample fluidity and to ensure the reasonable growth of the money supply and social financing, according to Sun Guofeng, the head of the PBOC's Monetary Policy Department.

The PBOC is requiring financial institutions to improve the efficiency of yuan cross-border and offshore clearing, according to an official statement Friday following a meeting of the PBOC and the State-Owned Assets Supervision and Administration Commission. The yuan's exchange rate has become more flexible and more companies are using it for cross-border transactions. Companies at the meeting suggested improving the infrastructure for cross-border yuan transactions, the statement said.

Chinese state-owned Yongcheng Electricity Coal Group has defaulted on CNY1 billion of triple-A bonds, causing panic and driving the prices of similar bonds issued by SOEs and local government financing vehicles around 10% lower on Thursday, according to the Shanghai Securities News. Issuers will continue to see high interest rates on bonds in Q4, the newspaper reported citing Wang Qing, the chief economist with Golden Credit Rating. Credit conditions are expected to tighten next year so highly leveraged corporations will have difficulties servicing bonds, the News reported citing a report by Industrial Securities.