MNI China Daily Summary: Friday, December 4

EXCLUSIVE: China's exports could grow by double digits through at least the first half of next year driven by the demand-led recovery in developed markets and the slower rebound in competing manufacturing economies, which will counter the threat from an appreciating yuan and higher shipping costs, policy advisors told MNI.

EXCLUSIVE: China is likely to impose additional restrictions on Australian agricultural products, three Chinese policy advisors told MNI, speaking after anti-dumping tariffs on Australian wine became the latest expression of the frayed relations between Beijing and Canberra.

POLICY: China should prioritise joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, push to implement the Regional Economic Cooperative Partnership, and finish China-EU, and China-Japan-Korea free trade negotiations, Su Qingyi, a researcher from the Chinese Academy of Social Sciences, an official think tank, wrote in a blog post published by the China Finance 40 Forum.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY10 billion via 7-day reverse repos with rates unchanged at 2.2%. This resulted in a net drain of CNY110 billion given the maturity of CNY120 billion of reverse repos today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 2.0372% from close of 2.0193% on Thursday, Wind Information showed. The overnight repo average increased to 1.0786% from the previous 0.8853%.

YUAN: The currency strengthened to 6.5302 against the dollar from 6.5590 on Thursday. The PBOC set the dollar-yuan central parity rate lower for a third day at 6.5507, compared with the 6.5592 set on Thursday.

BONDS: The yield on 10-year China Government Bond was last at 3.2850%, down from Thursday's 3.2950%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.07% to 3,444.58 while the CSI300 index gained by 0.18% to 5,065.92. Hang Seng Index rose 0.40% to 26,835.92.

FROM THE PRESS: China should include yuan exchange rate volatility in monetary policy frameworks such as the formation of a Financial Conditions Index (FCI), YiCai reported on Thursday citing Guan Tao, an economist from BOC International. Since the PBOC has stopped normalized intervention in the forex market, a FCI could serve as a tool to assess liquidity in the market and as a reference to future policy decisions, Guan said. A FCI would help ensure domestic economic and financial stability and would not target a specific exchange rate level, YiCai reported citing Guan.

Anticipation of a closer alliance between the EU and the incoming Biden administration as a counter to China's rising influence will be difficult to put into practice as the U.S. focus is on protecting its hegemony in leading the western alliance while Europe's concerns are protecting its economic interests, wrote Hu Xijin, the editor of the state-run Global Times. The two sides will have difficulties in coordinating their desired goals and policy measures, and China shouldn't have any fears beyond the psychological pressure, the commentary said.

China should include regulations on cross-border data flow in trade and investment negotiations and take the initiative on these issues given the lack of a universal data policy, the Economic Information Daily reported. Data is a strategic resource which is a part of sovereignty, regardless of whether it is owned by individuals or the state, the Daily report said. China should establish legal systems that balance data protection and data flow. Ensuring data protection and privacy is seen as one barrier preventing China from becoming a part of the CPTPP.