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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
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]

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