MNI China Daily Summary: Thursday, February 4

POLICY: China will boost communications with Comprehensive and Progressive Agreement for Trans-Pacific Partnership member states on technical issues as China continues to research on matters related to joining the free-trade pact in future, said Gao Feng, spokesman of the Ministry of Commerce at a briefing on Thursday. He did not comment directly when asked about the UK's recent application to join the CPTPP.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY100 billion via 14-day reverse repos with rates unchanged at 2.35% today. This keeps the liquidity unchanged after offsetting the maturity of CNY100 billion repos today, according to Wind Information. The operation aims to maintain stable liquidity before the Spring Festival, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 2.3168% from the 2.1181% on Wednesday, Wind Information showed. The overnight repo average increased to 2.0549% from the previous 1.8648%.

YUAN: The currency weakened to 6.4629 against the dollar from 6.4587 on Wednesday. The PBOC set the dollar-yuan central parity rate lower at 6.4605 today. This compares with the 6.4669 set on Wednesday.

BONDS: The yield on 10-year China Government Bond was last at 3.2800%, up from Wednesday's 3.2575%, according to Wind Information.

STOCKS: The Shanghai Composite Index fell 0.44% to 3,501.86, while the CSI300 index decreased 0.21% to 5,473.95. Hang Seng Index edged down 0.66% to 29,113.50.

FROM THE PRESS: The Chinese yuan may strengthen further to as high as 6.2 against the U.S. dollar amid increased volatility, the China Securities Journal reported citing Zhang Ming, deputy director of the Institute of Finance at the Chinese Academy of Social Sciences. In the long term, the yuan's rally may be difficult to support given China's current account surplus will likely narrow after other economies recover, the newspaper said citing Liu Zhengning, a CICC analyst.

China will emphasize the sustainability of its macro-economic policies and ensure they are based on normalized fundamentals, while also ensuring that any withdrawal of stimulus will be measured to avoid abrupt changes and potential risks, Chen Changsheng, a director from the Development Research Center of the State Council said in an interview with Economic Daily. China's CPI this year should be relatively low as regional pandemic control measures subside and consumer demand recovers, said Chen. China should see a lower dependence on real estate finances to make quick asset turnovers as new regulations curb unregulated real estate loans, Chen said.

Comments by Japan's State Minister of Defense saying China was opposing 'politically free democratic nations' on the Myanmar situation reflect Japan's Cold War mentality, the Global Times said citing Xu Liping, director of the Center for Southeast Asian Studies at the Chinese Academy of Social Sciences. The military takeover does not mean joining 'the league of China', Xu said. Smaller countries have been given little choice in their form of governance as western democracies actively promote their models, the newspaper said.