MNI China Daily Summary: Tuesday, December 31

     DATA: China's Purchasing Manager Index (PMI) rose to 50.2 in December,

continuing last month's momentum as underlying demand grows, data released on

Tuesday showed. The Production sub-index, driven by more active supplies and

demands before Chinese traditional New Year holiday, accelerated to 53.2 from

the previous 52.6. New orders rose 51.2 in December, barely changed from last

month's 51.3, mirroring a warming market for manufacturing products.

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

operations, leaving liquidity unchanged as no reverse repos mature today,

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

relatively high due to an increase in fiscal expenditures near the end of the

year, PBOC said.

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

institutions (DR007) increased to 2.8110% from 2.6512% on Monday, Wind

Information showed. The overnight repo average increased to 1.7215% from 1.1028%

on Monday.

     YUAN: The yuan strengthened to 6.9662 against the dollar from 6.9878 on

Monday. PBOC set the dollar-yuan central parity rate lower at 6.9762 from 6.9805

on Monday.

     BONDS: The yield on 10-year China Government Bonds was last at 3.1550%, up

from the close of 3.1525% on Friday, according to Wind Information.

     STOCKS: The Shanghai Composite Index gained 0.33% to 3050.12 on Monday.

Hong Kong's Hang Seng Index lost 0.46% to 28189.75.

     FROM THE PRESS: China will continue to implement expansionary fiscal

policies in 2020 and there is still room for fee cuts and tax cuts, according to

an article in Securities Times on Tuesday. The government will focus on

"improving the quality and effectiveness" of fiscal policies, which meant making

better use of fiscal investments and adopting a stricter budgetary approach, the

newspaper reported by citing Zhang Yiqun, vice chairman of the China Financial

Budget Performance Committee.

     The Chinese government will introduce more counter-cyclical policies to

drive the steady growth of infrastructure investment, Economic Information Daily

reported on Tuesday. A total of CNY170.6 billion local government

special-purpose bonds will be issued in January with the aim of improving the

financing of infrastructure projects and boosting the growth of fixed-asset

investment, the newspaper said.

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

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