MNI China Daily Summary: Wednesday, December 2

EXCLUSIVE: The world's biggest trade deal will help China's foreign trade grow by double-digits in the next five to 10 years and allow the country to rival Japan at the top of Asian supply chains by 2040, Wei Jianguo, former vice minister of commerce, told MNI. The recently-signed Regional Comprehensive Economic Partnership should power exports of auto parts, mobile phone accessories and medical supplies, Wei, now vice chairman of the China Center for International Economic Exchange, said in an interview. It will also improve Chinese factories' access to intermediate goods from Japan and South Korea, as well as Australian minerals and farm products from ASEAN countries, he said.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY10 billion via 7-day reverse repos with rates unchanged at 2.2% on Wednesday. This resulted in a net drain of CNY110 billion given the maturity of CNY120 billion repos today, according to Wind Information. The operation aims to maintain the liquidity stable and ample in the banking system , the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.8379% from close of 1.7587% on Tuesday, Wind Information showed. The overnight repo average fell to 0.7432% from the previous 0.7606%.

YUAN: The currency strengthened to 6.5684 against the dollar from 6.5707 on Tuesday. The PBOC set the dollar-yuan central parity rate lower at 6.5611, compared with the 6.5921 set on Tuesday.

BONDS: The yield on 10-year China Government Bond was last at 3.3110%, up from Monday's 3.2875%, according to Wind Information.

STOCKS: The Shanghai Composite Index declined 0.07% to 3,449.38. The CSI300 index stayed flat for today at 5067.14. Hang Seng Index fell 0.13% to 26532.58.

FROM THE PRESS: China is likely to maintain the amount of special debt to be issued in 2021 given the recovery is well underway, the China Securities Journal reported citing analysts. Local governments have issued CNY138 billion in bonds by November, with none under new quotas, the Journal reported citing data from Wind. Special bonds will still be needed to support infrastructure investment while fiscal policies will remain positive next year, so the scale of issuance is likely to be the same level as 2020, the newspaper reported citing Sun Binbin, an analyst from Tianfeng Securities. Newly added local government bond issuance next year should be at just over CNY 1 trillion if the target deficit ratio is set back at 3%, said Sun.

China's banking regulator fined banks a record of over CNY1 billion in the first 11 months, with many fines for illegal loans to the real estate industry, the Economic Information Daily said citing research based on regulatory data. Regulators are likely to continue their tough measures on real estate and the related shadow lending activities, the newspaper said citing Tao Jin, an analyst with the Suning Institute of Finance.

U.S. government surprise raids targeting members of the Communist Party of China on arriving Chinese ships and airplanes are "McCarthyist" and justify a reciprocal response from China, the English-language China Daily said in an editorial. The outgoing Trump administration is creating difficulties for the incoming administration and hopes to make the aggressive U.S. approach to China irreversible, the newspaper said. The 90-million-member CPC holds a legitimate leadership role in China, and it seeks a constructive China-US relationship, the newspaper said.