MNI China Daily Summary: Tuesday, January 8

     TOP NEWS: North Korean leader Kim Jong-un arrived in Beijing to start a

four-day visit, Xinhua News Agency reported. Ministry of Foreign Affairs

spokesman Lu Kang refused to draw any connection between the visit and ongoing

trade talks with the U.S. "China has a lot of major diplomatic agendas, so it is

normal for them to overlap," Lu said in a presser today.

     TRADE WAR: Bloomberg reported that Vice Premier Liu He made a surprise

appearance at the first day of the latest round of trade negotiations between

China and the U.S. in Beijing. The MFA said it is natural that Vice Premier Liu

He, also the top trade negotiator, should pay a visit to the two countries'

trade representatives and attend the opening ceremony.

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

operations(OMOs) for a second day today. This resulted in a net drain of CNY20

billion as the same amount of reverse repos matured, according to Wind

Information. The PBOC said liquidity in the banking system was at a relatively

high level.

     RATE: The 7-day weighted average interbank repo rate for depository

institutions (DR007) decreased to 2.2131% from Monday's close of 2.2808%, Wind

data showed. The overnight repo average increased to 1.3794% from Monday's

1.3790%.

     Yuan: The yuan depreciated to 6.8561 against the U.S. dollar from Monday's

close of 6.8499. The PBOC set the dollar-yuan central parity rate stronger for a

third day at 6.8402 on Tuesday, compared with 6.8517 set on Monday.

     STOCKS: The benchmark Shanghai Composite Index fell 0.26% to 2,526.46. Hong

Kong's Hang Seng Index increased 0.15% to 25,875.45.

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

3.1300%, down from Monday's closing 3.1650%, according to Wind Information.

     FROM THE PRESS: China's economic growth in 2018 is likely to have met the

target of 6.5% set at the beginning of the year, China Business News reported

late Monday, citing Ning Jizhe, director of the National Bureau of Statistics.

Total economic output is expected to have been CNY90 trillion, an increase of

CNY8 trillion from 2017, the newspaper said.

     A U.S. warship traveling in Chinese waters won't affect trade negotiations

between China and the U.S., Global Times said in a commentary. If the U.S. is

trying to use provocation as a bargaining chip, it only shows its willingness to

reach a deal, the newspaper said. Any possible progress will be in line with the

needs of the bilateral relations and global politics, the newspaper said.

     China's monetary policy still has room for quantitative adjustment, which

can continue to support growth, stabilize employment and boost investment,

Shanghai Securities News reported, citing Zhou Xiaochuan, former governor of the

People's Bank of China. China also needs better coordination between fiscal and

monetary policies, the newspaper said citing Zhou.

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

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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