MNI China Daily Summary: Thursday, November 8

     TOP NEWS: China's exports grew 15.6% y/y in October, up from 14.5% growth

in September, China Customs data showed on Thursday. An MNI poll had recorded a

median forecast of 12%. Gains in imports accelerated to 21.4%, from 14.3% in

September and the fastest in three months. The trade surplus stood at $34.01

billion, up from September's $31.69 billion and showing no sign of any major

impact from the trade war. The data is believed to have been boosted by a

front-loading effect from businesses rushing to ship goods before a rise in U.S.

tariffs from 10% to 25% next year.

     EXCLUSIVE: The results of the U.S. mid-term elections left Chinese

government advisers little moved, with few implications seen for the trade

dispute between the world's two largest economies ahead of a crucial meeting

between Donald Trump and Xi Jinping in Buenos Aires at the end of the month.

While U.S. President Trump has lost control of the House of Representatives, the

victorious Democrats share many of his attitudes towards China, they said. "It

should not impact China-U.S. relations and trade negotiations much," said Wang

Haifeng, director of International Trade and Investment at the Chinese Academy

of Macroeconomic Research. "The Democratic Party and the Republican Party do not

have big differences in their attitudes towards China, only their methods are

different and Trump is just more direct." (For full story see:

https://www.marketnews.com/node/1834054)

     POLICY: China's central bank on Wednesday called for lenders to boost

credit to private small- and medium-sized businesses. In a meeting with 30 city

commercial banks in Zhejiang province, People's Bank of China Deputy Governor

Pan Gongsheng told lenders to treat private companies on equal terms with

state-owned enterprises. (For full story see:

https://www.marketnews.com/node/1834295)

     LIQUIDITY: The PBOC skipped open market operations (OMOs) on Thursday,

leaving liquidity unchanged. No reverse repos mature today, according to Wind

Information. The central bank said liquidity in the banking system is at a

reasonable and ample level.

     RATE: The 7-day weighted average interbank repo average rate for depository

institutions (DR007) decreased to 2.5581% from Wednesday's close of 2.5610%,

Wind Information showed. The overnight repo average decreased to 1.9550% from

Wednesday's 2.0666%.

     YUAN: The yuan depreciated to 6.9329 against the U.S. dollar from

Wednesday's close of 6.9253. The PBOC set the yuan central parity rate weaker at

6.9163 on Thursday, compared with Wednesday's 6.9065.

     BONDS: The yield on the benchmark 10-year China Government Bond was last at

3.4825%, up from the closing price of 3.4800% on Wednesday, according to Wind

Information.

     STOCKS: The benchmark Shanghai Composite Index closed 0.22% lower at

2,635.63. Hong Kong's Hang Seng Index increased 0.31% to 26,227.72.

     FROM THE PRESS: The PBOC's issuance of CNY20 billion bills in Hong Kong on

Wednesday was to deter speculators shorting the offshore yuan, reported Economic

View, owned by China News Service, citing Cai Hao, a researcher at the National

Institution for Finance & Development. The move will drain the liquidity in the

offshore market and increase the cost of shorting yuan, Cai was reported as

saying. The relatively smaller amount means the step served as a warning, Cai

said. The PBOC yesterday issued CNY10 billion in 3-month bills at 3.79%, and

CNY10 billion in 1-year bills at 4.2% in Hong Kong, Economic View said. (Link to

story: https://bit.ly/2yX1DHb)

     The increasing usage of the yuan in global markets helps ease the pressure

on China's shrinking foreign exchange reserves, the 21st Century Business Herald

said, citing an anonymous source in a foreign bank. More companies settling

cross-border trade and investment in yuan led to lower demand for the U.S.

dollar, reducing the pressure on banks' FX sales, the newspaper cited the source

as saying. The yuan is more accepted in Southeast Asia, but less often in the

Middle East and Africa, the newspaper said, citing sources in major state-owned

banks. The usage of the yuan in importing commodities is still small, which

consumes China's FX reserves, the newspaper said. (Link to story:

https://bit.ly/2JNycvl)

     China's strategy of opening needs to adapt to new international economic

and trade situations, shifting from relying on exports to focusing on imports,

and to becoming a great source of capital, Caixin said, citing Huang Qifan, vice

chairman of the China Center for International Economic Exchanges and former

mayor of Chongqing city. (Link to the story: https://bit.ly/2ASeTy4)

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI London Bureau; +44208-865-3829; email: Jason.Webb@marketnews.com

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