MNI China Daily Summary: Tuesday, December 17

     TRADE: China is reluctant to confirm details of promised purchases of U.S.

goods agreed under its phase one trade deal with Washington, policy advisors

told MNI, pointing to sensitivities over World Trade Organization rules and

possible objections by other countries. 

     LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations

on Tuesday, leaving liquidity unchanged as no reverse repos mature today,

according to Wind Information. Total liquidity in the banking system is

reasonable and ample, the PBOC said.

     RATES: The seven-day weighted-average interbank repo rate for depository

institutions (DR007) increased to 2.5672% from Monday's close of 2.4964%, Wind

Information showed. The overnight repo average rose to 2.5033% from Monday's

2.4331%.

     YUAN: The yuan strengthened to 7.0024 against the U.S. dollar from Monday's

close of 7.0027. PBOC set the dollar-yuan central parity rate higher for the

first day in six at 6.9971, compared with Monday's 6.9915.

     BONDS: The yield on 10-year China Government Bond was last at 3.2200%,

higher than Friday's 3.1975%, according to Wind Information. 

     STOCKS: The Shanghai Composite Index gained 1.27% to 3,022.42, led by

financial sector shares. Hang Seng Index edged up 1.12% to 27,817.49. 

     FROM THE PRESS: China's former Finance Minister Lou Jiwei recommended the

ministry issuing CNY10 trillion special bonds to purchase half of the central

bank's foreign reserves and boost monetary policy tools, according to China

Securities Times. The current mechanisms for monetary policy are less flexible

because they are less transparent and costly, the newspaper said citing Lou.

     The PBOC is expected to cut interest rates in January to meet rising

liquidity needs due to Chinese New Year, government bond issuances and bank

loans, the Shanghai Securities News reported citing Yan Se, Chief Economist with

Founder Securities.

     The RMB-USD exchange rate may remain volatile in a range between 6.9 and 7

yuan in the future, according to a report in the China Securities Journal. The

Journal's report, which cited estimates from various market participants, said

the current valuation of RMB assets is generally low and therefore attractive to

foreign investors. Wen Bin, the Chief Analyst with Minsheng Securities, expected

the RMB to appreciate slightly, the report said.

--MNI Beijing Bureau; tel: +86 (10) 8532-5998; email: flora.guo@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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