MNI China Daily Summary: Thursday, December 31

LIQUIDITY: The People's Bank of China (PBOC) injected CNY90 billion via 7-day reverse repos with the rate unchanged on Thursday. This resulted in a net injection of CNY80 billion given the maturity of CNY10 billion of reverse repos today, according to Wind Information. The operations aim to maintain stable liquidity at the end of the year, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) dropped to 2.4565% from 2.4581% on Wednesday, Wind Information showed. The overnight repo average increased to 1.1025% from the previous 0.6209%.

YUAN: The currency weakened to 6.5398 against the dollar from 6.5307 on Wednesday. The PBOC set the dollar-yuan central parity rate lower at 6.5249 compared with the 6.5325 set on Wednesday.

BONDS: The yield on the 10-year China Government Bond was last at 3.1775%, up from Wednesday's 3.1650%, according to Wind Information.

STOCKS: The Shanghai Composite Index gained 1.72% to 3,473.07, while the CSI300 index increased 1.91% to 5,211.29. The Hang Seng Index increased by 0.31% to 27231.13.

FROM THE PRESS: China has demonstrated its determination and confidence in the further opening of its economy with the conclusion of bilateral investment treaty negotiations with the EU, China's Chairman Xi Jinping said at a virtual conference with European leaders on Wednesday. Xii said the pact, which took seven years to negotiate, provided Chinese and European companies with greater market access and integration, according to the People's Daily. China also hopes to coordinate with the EU on vaccine distribution, global economic recovery and development of a green economy, the Daily reported.

China should see GDP growth of 6% or higher in the last quarter of 2020 based on strong recoveries in exports and the service industry, the 21st Century Business Herald reported, citing an interview with Peng Wensheng, chief economist from CICC. GDP growth in 2021 should reach 8%-9%, according to Peng. China will be mindful of rising debt levels while implementing monetary policy, he said. China should also anticipate exports slowing as other exporters regain capacity and as people shift from commodity consumption to services.

China may issue CNY4.7 trillion in new local government bonds in 2021, the China Securities Journal reported, citing analyst Sun Binbin from TF Securities. Bond-funded infrastructure spending may be scaled down as the economy normalises following this year's pandemic, Sun said. Total local debt issuance reached CNY6.4 trillion in 2020, the Journal reported.