MNI China Daily Summary: Tuesday, January 21

     POLICY: China's commitment to boosting U.S. imports under the Phase One

agreement will fall under market and WTO rules with no impact on other exporter

nations, Li Xingqian, the head of the Department of Foreign Trade at the

Ministry of Commerce (MOFCOM), said Tuesday. "China has a population of 1.4

billion and a huge and a continuously growing middle-income group, so there is

great potential market demand," said Li, calling for the U.S. to create

favourable conditions for expanding imports.

     LIQUIDITY: The People's Bank of China (PBOC) injected CNY100 billion via

14-day reverse repos with the rate unchanged at 2.65%, according to a statement

on PBOC website. The injection aims to offset rising demand for cash and keep

liquidity in the banking system reasonable and ample before Chinese New Year,

PBOC said.

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

institutions (DR007) rose to 2.5727% from 2.5708% on Monday, Wind Information

showed. The overnight repo average fell to 1.8569% from 2.2271% on Monday.

     YUAN: The yuan weakened to 6.9065 against the dollar from 6.8613 on Monday.

PBOC set the dollar-yuan central parity rate lower at 6.8606 from 6.8664 on

Monday. Today's fixing is the strongest since Jul 2, 2019. 

     BONDS: The yield on 10-year China Government Bonds was last at 3.0500%,

down from the close of 3.0825% on Monday, according to Wind Information.

     STOCKS: The Shanghai Composite Index dipped 1.41% to 3,052.14 amid fears on

the spread of a new virus that has caused four deaths. Hong Kong's Hang Seng

Index tumbled 2.81% to 27,985.33.

     FROM THE PRESS: The PBOC is expected to cut the rates on Medium-term

Lending Facility (MLF) and open market operations when the upcoming Chinese New

Year holiday ends on Jan 31, the Shanghai Securities News said citing Ming Ming,

deputy director of research at Citic Securities. The Loan Prime Rate (LPR) has

stayed the same level this month on tight liquidity even after the central bank

injected CNY 30 billion through MLF and lowered the required reserve ratios by

50 bps, the newspaper reported citing Wang Yifeng, an analyst with Everbright

Securities. 

     The yuan has little room to gain further against the dollar if lacking

fresh news, as the impact from factors supporting a recent rally is likely

short-term, the China Business News reported citing economists and FX traders.

Strong fixings by the PBOC, increased FX selling at yearend, easing trade

tensions with the U.S., capital inflows and expectations for a stronger economy

helped push the yuan to the highest in six months, the newspaper said.

--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: M$A$$$,M$Q$$$,MBQ$$$]