MNI China Daily Summary: Tuesday, December 15

POLICY: China's Q4 GDP is expected to rise above trend following Q3's 4.9% jump and the economy may see a relatively fast growth rate next year due to the low base this year, said Fu Linghui, the spokesman of the National Bureau of Statistic at a briefing on Tuesday, adding that the recovery would need continuity and effectiveness of policies. "Any policy adjustment should be targeted," said Fu, when asked if monetary and fiscal policies should gradually be normalised amid the strong growth expectations.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY950 billion via one-year medium-term lending facility (MLF) with the rate unchanged at 2.95% on Tuesday. This aims to roll over the CNY900 billion of MLFs maturing this month and fully meet liquidity needs, the PBOC said on its website. The PBOC also injected CNY10 billion via 7-day reverse repos. In total, the central bank net injected CNY900 billion as CNY60 billion repos mature today.

DATA: Industrial production grew for the eighth month by 7.0% y/y in November, edging up 0.1 percentage points from the gain in Oct and hitting the highest level since March 2019, while outperforming the 6.8% forecast. Retail sales rose 5.0% y/y in Nov, the highest this year, further expanding from the 4.3% gain in Oct. Fixed-asset Investment continued to rise 2.6% y/y in the Jan-Nov period, improving from Jan-Oct's 1.8%. The recovery in manufacturing investment lagged behind, with a fall of 3.5% following the 5.3% decline in Jan-Oct. Infrastructure investment rose 1.0%, accelerating from the 0.7% gain in Jan-Oct, and property investment growth expanded to 6.8% y/y, growing for the sixth month from the previous 6.3%. Registered urban unemployment edged down 0.1 percentage point to 5.2% from Oct.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) dropped to 2.0108% from the 2.1003% on Monday, Wind Information showed. The overnight repo average decreased to 1.3367% from the previous 1.6789%.

YUAN: The currency weakened to 6.5446 against the dollar from 6.5367 on Monday. The PBOC set the dollar-yuan central parity rate higher at 6.5434, compared with the 6.5361 set on Monday.

BONDS: The yield on 10-year China Government Bond was last at 3.2900%, down from Monday's 3.3000%, according to Wind Information.

STOCKS: The Shanghai Composite Index dropped 0.06% to 3,367.23, while the CSI300 index gained 0.21% to 4,945.10. Hang Seng Index lost 0.69% to 26207.29.

FROM THE PRESS: Real estate development has been used to drive growth over the last 20 years but China should stop using this growth model, the Economic Information Daily said in an editorial. As the impact of the pandemic accelerates the digital economy and reduces the advantages of older industries, China should regulate the property market according to specific locations and prevent a contagion of financial risks from real estate market volatility, the Daily said.

China's economy may grow 7.8% in 2021 given this year's lower base of comparison, with retail sales gaining as much as 5% as consumption strengthens, the Economic Information Daily reported citing researcher Li Xuesong of the Chinese Academy of Social Sciences. Li's projection compares with a forecast of 8.2% by the IMF, which along with other global bodies has raised China's 2021 outlook, the newspaper said. However, the service sector, consumption, incomes and demand remain the weak links in the recovery, the Daily said citing Li's Academy colleague Chai Fang.

Foreign missions and companies must hire members of the Chinese Communist Party if they seek to expand in China as members of the CCP also make up a high proportion of the available talent in China, the party-run Global Times said in an editorial. In response to Australian and British media reports that identified more than a million CCP members, including those employed by foreign operations, the editorial said that treating CCP members as infiltrators and intelligence agents is the result of extreme ideological views against China.