MNI China Daily Summary: Thursday, December 10

POLICY: China will work with fellow WTO members to revive the Appellate Body as soon as possible to help uphold free trade and a rule-based multilateral trading system, Ministry of Commerce spokesman Gao Feng, said Thursday. His comments came following the departure a week ago of the last judge on the Appellate Body, China's Hong Zhao. No replacements have yet been appointed to the seven-member board.

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 1.8975% from the 1.8685% on Wednesday, Wind Information showed. The overnight repo average decrease to 0.9877% from the previous 1.0380%.

YUAN: The currency weakened to 6.5480 against the dollar from 6.5374 on Wednesday. The PBOC set the dollar-yuan central parity rate higher at 6.5476, compared with the 6.5311 set on Wednesday.

BONDS: The yield on 10-year China Government Bond was last at 3.2750%, down from Wednesday's 3.2825%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.04% to 3,373.28, while the CSI300 index decreased by 0.04% to 4,940.52. Hang Seng Index lost 0.35% to 26,410.59.

FROM THE PRESS: China may tighten its credit expansion as it normalizes its monetary policy and redirects capital to the real economy, reported Securities Times citing Wang Qing, an analyst from Golden Credit Rating. The scale of China's social financing and new loans was likely to drop in December to ensure new credit this year totals around CNY20 trillion, and that social financing is within CNY35 trillion, Wang said. Wang Yifeng, an analyst from Everbright Securities told the Times that new credit growth in Q1 was likely to rise given steady demand and increasing credit supply before the Lunar New Year, while the supply side faced marginal tightening.

China should keep its current monetary policies, despite registering -0.5% CPI in November, as the weakening inflation was largely caused by falling food prices while core demand remains strong, the China Securities Journal said citing economists. The PPI may strengthen in December and return to positive by Q1 after recording -1.5% in November, supported by stronger domestic demand, the newspaper said.

Australia will pay a price if its unreasonable China policy fails to change, the Global Times, a tabloid owned by the People's Daily, said in an editorial late Wednesday. Australia has been a "lap dog" of the U.S. in attacking China, the newspaper said. Canberra should seek to improve ties with China in 2021 in line with Australian public opinion and the views of the Opposition party, the Times editorial said.