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TOP NEWS: China said on Tuesday it will further reduce market barriers,
Xinhua News Agency reported. A new so-called negative list of industries closed
to investment has 151 items and 581 specific rules, down from 177 and 288 in the
previous version, Xinhua said.
INSIGHT: China will put weight on countercyclical measures, including
further prudent monetary policy easing and more proactive fiscal policy, to
boost domestic investment which is subject to the pressure of an economic
slowdown, MNI understands from officials and advisors. A major driver of policy
next year will be investment, including in infrastructure and manufacturing. The
monetary authority will retain adequate liquidity while there will be enhanced
targeted credit support to small private businesses and fiscal policy will
provide a larger tax cut and increased spending to strengthen infrastructure,
sources told MNI.
LIQUIDITY: The People's Bank of China (PBOC) injected CNY30 billion by
7-day reverse repos, and CNY20 billion by 14-day reverse repos today, a seventh
trading day that the central bank has added liquidity by open market
operations(OMOs). It resulted in a net drain of CNY90 billion given the maturity
of CNY140 billion of reverse repos, according to Wind Information. The PBOC said
today's OMO is to offset financial institutions' payment of deposit reserve, the
issuance of government bonds and other factors.
RATES: The 7-day weighted average interbank repo average rate for
depository institutions (DR007) decreased to 2.5735% from Monday's close of
2.6290%, Wind Information showed. The overnight repo average fell to 1.9952%
from Monday's 2.2639%.
YUAN: The yuan appreciated to 6.8860 against the U.S. dollar from Monday's
close of 6.8965. The PBOC set the dollar-yuan central parity rate at 6.8919
today, compared with 6.9006 on Monday.
BONDS: The yield on the benchmark 10-year China Government Bond was last at
3.3200%, down from the 3.3525% closing on Monday, according to Wind Information.
STOCK: The benchmark Shanghai Composite Index fell 0.88% to 2,504.82. Hong
Kong market is closed for Christmas Day.
FROM THE PRESS: China's monetary policy next year should not be loosened to
the extent that it encourages speculation in real estate again, nor should it
result in excessive liquidity in the banking system while failing to support the
economy, the 21st Century Business Herald reported today citing Sheng Songcheng,
a former official at the People's Bank of China. Regulators may consider
lowering the reserve requirement ratio (RRR) rather than cutting broad interest
rates if necessary, the newspaper said citing Sheng.
China's fiscal policy next year will aim to be more proactive and efficient
according to the tone set by the Central Economic Work Conference last week,
Xinhua News Agency reported today citing interviews with economists. The
government will keep a sizeable deficit, put forward larger tax and fee cuts,
increase the issuance of special bonds, and expand expenditures at targeted
areas such as improving people's livelihood, Xinhua said.
China's State Council pledged to further support the development of private
companies and SMEs, treat them equally with SOEs in terms of bidding for land
use, remove investment barriers in resources and transportation, further cut
taxes and fees and improve financing services including targeted RRR cuts for
them, Xinhua News Agency reported on Monday night following a cabinet meeting
chaired by Premier Li Keqiang.
--MNI Beijing Bureau; +86 (10) 8532-5998; email: firstname.lastname@example.org
--MNI Beijing Bureau; +86 10 8532 5998; email: email@example.com