MNI China Daily Summary: Friday, December 18

EXCLUSIVE: China is unlikely to set a growth target for next year, as the low base comparison with 2020 due to Covid disruption will drive a significant rebound in headline gross domestic product data, and as authorities steer a cautious path between maintaining economic expansion and avoiding excessive growth in indebtedness, policy advisors told MNI.

EXCLUSIVE: China has no pressing need for Australian coal since it accounts for just a small part of total consumption and domestic capacity is more than sufficient to make up for any shortfall, policy advisors and industry experts said, adding that they expect domestic coal production to pick up with the release of fresh quotas for the new year.

POLICY: Negotiations over the China-E.U. investment deal is now at the final stage and both parties still hope to achieve the goals set by leaders on both sides said Foreign Ministry Spokesman, Wang Wenbin Friday. The China-E.U. Bilateral Investment Deal, or Comprehensive Investment Deal, has been under negotiation for seven years and both parties have pledged to conclude the negotiation this year.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY10 billion via 7-day reverse repos with rates unchanged at 2.2%. This keeps the liquidity unchanged after offsetting the maturity of CNY10 billion repos today, according to Wind Information. The operation aims to maintain the liquidity in the banking system at a reasonable and ample level, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 2.1137% from the close of 1.8898% on Thursday, Wind Information showed. The overnight repo average increased to 1.7125% from the previous 1.3658%.

YUAN: The currency weakened to 6.5415 against the dollar from 6.5335 on Thursday. The PBOC set the dollar-yuan central parity rate slightly lower at 6.5315, compared with the 6.5362 set on Thursday.

BONDS: The yield on 10-year China Government Bond was last at 3.2950%, up from Thursday's 3.2925%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.29% to 3,394.90 while the CSI300 index fell 0.35% to 4,999.97. Hang Seng Index decreased 0.67% to 26,498.60.

FROM THE PRESS: Chinese provinces including Zhejiang and Hunan are restricting power usage due to a lack of coal as yearend production safety protocols, environmental restrictions and slowing imports crimped demand, the Securities Daily reported citing businesses interviewed. MNI noted that thermal coal prices are surging in China after authorities began to restrict imports from Australia, the world's largest supplier, as bilateral tensions continue to rise this year.

China's economic recovery is unstable and unbalanced due to uncertainties around the pandemic, weak demand, rising financial risks, trade frictions and unemployment, YiCai.com reported citing analysts. While some have projected growth as high as 9% next year this is mainly driven by a low comparison base and policy support, the newspaper said citing Shen Jianguang, chief economist of JD Finance. China should continue to encourage technological innovation, improve industrial efficiency amid an aging population in an economy with a declining cheap labor force and widening income gaps, the newspaper said citing analysts.

China launched a fifth state-owned asset management company (AMC), China Galaxy Asset Management Co., on Dec. 11 to deal with non-performing assets in the securities sector, the Financial News reported citing the China Banking and Insurance Regulatory Commission. The four other AMCs, set up 20 years ago, primarily deal with non-performing loans at state banks. China also allowed the first foreign-owned AMC, Oaktree (Beijing) Investment Management Co. to register on Feb. 18, according to the report.