MNI China Daily Summary: Monday, January 25

EXCLUSIVE: China should seize on Joe Biden's initiatives to deal with the pandemic and climate change as opportunities to cooperate on shared interests and foster dialogue, said policy advisors who are cautiously optimistic that the bilateral relationship will improve to the extent allowed by differing ideologies and rising competition.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY2 billion via 7-day reverse repos with the rate unchanged. This resulted in a net drain of CNY240.5 billion given the maturity of CNY2 billion of reverse repos and CNY240.5 billion of Targeted Medium-term Lending Facilities (TMLFs) 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 2.4218% from the 2.3504% on Friday, Wind Information showed. The overnight repo average increased to 2.4955% from the previous 2.4567%.

YUAN: The currency strengthened to 6.4763 against the dollar from 6.4777 on Friday. The PBOC set the dollar-yuan central parity rate higher at 6.4819 today. This compares with the 6.4617 set on Friday, marking the biggest daily drop in the recent five trading days.

BONDS: The yield on 10-year China Government Bond was last at 3.1850%, up from Thursday's 3.1700%, according to Wind Information.

STOCKS: The Shanghai Composite Index increased 0.48% to 3,624.24 while the CSI300 index gained 1.01% to 5,625.92. Hang Seng Index rallied by 2.41% to 30,159.01.

FROM THE PRESS: The PBOC is likely to inject liquidity by rolling over maturing MLFs before Feb. 11, prior to the Chinese New Year, the China Securities Journal reported citing analysts. The PBOC will also use reverse repos or even temporary tools such as Contingent Reserve Arrangement (CRA) to inject liquidity, although RRRs are likely to remain unchanged, the newspaper said. More than CNY800 billion liquidity may be siphoned off this week as various monetary instruments expire, the newspaper noted.

Chinese cities with hot real estate markets may follow Shanghai and Shenzhen in moderating house prices through higher transaction costs and boosting the supply of homes, the Chinese Securities Journal reported. Many existing policies on property purchases had been devised five years ago, and they should be reinforced and updated to address new forces driving the markets such as talent-attracting programs, the Journal said.

The new Biden administration in Washington should send out a clear signal to differentiate itself from the previous administration's policy on Taiwan, the Global Times said in an editorial. The editorial urged the restoration of control over the Taiwan Straits on the basis of the one-China principle after fighter jets of the People's Liberation Army conducted warning exercises to the southwest airspace of the island. The Global Times warned that if the new White House follows the extreme policies of its predecessor, the situation was doomed to deteriorate and PLA jets were likely to appear over Taiwan.