MNI China Daily Summary: Tuesday, December 18

     EXCLUSIVE: China is expected to unveil a package of tax cuts next year,

larger in scale than the CNY1.3 trillion seen in 2018, to boost the economy, a

top policy advisor at the Ministry of Finance told MNI in an exclusive interview

on Tuesday. At the same time, fiscal spending will be limited as the tax

reductions are implemented, Liu Shangxi, the director of the Research Institute

for Fiscal Science under the Finance Ministry, said in Beijing before a national

ceremony of China's 40th anniversary of reform and opening-up.  

     POLICY: China will continue to open up to the rest of the world, promote

globalization through supporting open and non-discriminatory multilateral trade

systems, and add new growth momentum through building on the One Belt, One Road

initiative, President Xi Jinping said. It will "resolutely" strengthen and

develop the state-owed economy while supporting and directing the development of

non-state sectors, Xi said in a speech in Beijing marking the 40th anniversary

of the country's reform and opening-up policy.

     LIQUIDITY: The People's Bank of China (PBOC) injected CNY140 billion via

seven-day reverse repos, and CNY40 billion through 14-day reverse repos today.

It resulted in a net injection of CNY180 billion in liquidity, as no reverse

repos mature today, according to Wind Information. The central bank has added

liquidity for a second day. It said this is to offset the impact of the taxation

period and other factors, and keep the liquidity in the banking system at a

reasonable and ample level.

     RATES: The 7-day weighted average interbank repo average rate for

depository institutions (DR007) decreased to 2.6898% from Monday's close of

2.7058%, Wind Information showed. The overnight repo average rose to 2.6634%

from Monday's 2.6192%.

     YUAN: The yuan appreciated to 6.8927 against the U.S. dollar from Monday's

close of 6.9004. The PBOC set the dollar/yuan central parity rate at 6.8854

Tuesday, as the yuan strengthened from Monday's 6.8908.

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

3.3800%, up from the 3.3975% closing on Monday, according to Wind Information.

     STOCK: The benchmark Shanghai Composite Index fell 0.82% to 2,576.65, and

Hong Kong's Hang Seng Index dropped 1.05% to 25,814.25. 

     FROM THE PRESS: China should not give up its management of cross-border

capital flows, or directly intervene in the foreign exchange market when the

yuan exchange rate fluctuates greatly in the future, China Business News

reported, citing Yu Yongding, a member of the Chinese Academy of Social

Sciences. Financial regulators should vigorously push the development of the

derivatives market, so as to offer hedging tools for enterprises to avoid

exchange rate risk, the newspaper said citing Yu. The yuan still faces

short-term depreciation pressure, Yu added.

     China's National Development and Reform Commission is conducting a

feasibility study on interprovincial land transactions -- in effect, provinces

in need of more construction land will be allowed to purchase from other

provinces with abundant arable land. The move will be to help alleviate poverty

and promote economic development, the Economic Information Daily reported today,

citing insiders.

     China is still a developing country and will be for some time, based on the

current standards of any international organization, despite its economy

becoming the second-largest in the world, the People's Daily reported today,

citing Premier Li Keqiang. Li pledged that the government will continue to

deepen reforms, further expand the opening-up, create a fair business

environment, strictly protect intellectual property rights, while staying

committed to the development of an open economy, the daily said. China has both

the conditions and ability to cope with various risks and challenges,

maintaining stable economic growth, the newspaper added, citing Li.

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

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

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