MNI China Daily Summary: Wednesday, December 4

     EXCLUSIVE: China and the U.S. can still sign a phase-one trade deal before

the U.S. election and any comments from President Donald Trump suggesting

otherwise are likely just a negotiating ploy, a senior advisor to the Chinese

government told MNI Tuesday. "It is an old trick. Trump imposes pressure before

reaching a deal to get a better negotiation outcome for himself. It is still

possible for the two sides to sign a phase-one deal before the election," said

Wei Jianguo, a Vice Chairman at the Chinese Center for International Economic

Exchanges. 

     DATA: The Caixin China services PMI jumped to 53.5 in November from 51.1 in

the previous month, reaching the highest in five months. New orders grew

significantly while new export orders accelerated to a four-month high due to

improved demand helped by new projects, said Caixin. The rebound reported by

Caixin was in line with the official PMI for the services sector, released

Saturday, which rose 2.1 to 53.5.

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

for the 11th day, leaving liquidity unchanged as no reverse repos mature today,

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

relatively high, the PBOC said.

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

institutions (DR007) decreased to 2.2065% from Tuesday's close 2.2876%, Wind

Information showed. The overnight repo average fell to 1.9575% from 2.1032%

yesterday.

     YUAN: The yuan weakened to 7.0699 against the dollar from Tuesday's close

7.0471. PBOC set the dollar-yuan central parity rate higher at 7.0382, compared

with Tuesday's 7.0223.

     BONDS: The yield on 10-year China Government Bonds was last at 3.1875%,

flat from Tuesday's close, according to Wind Information. 

     STOCKS: The Shanghai Composite Index trimmed 0.23% to 2,878.12, dampened by

the lost of agricultural shares. Hong Kong's Hang Seng Index tumbled 1.25% to

26,062.56.

     FROM THE PRESS: China should avoid directly confronting the U.S., which is

wielding the tariff weapon around the world, but focus on its own development

and exploring areas of mutual interest with other countries, the Global Times

said in an editorial. In response to the U.S. slapping new tariffs on Brazil and

Argentina on Monday, the newspaper said there will be an "anti-U.S. wave" as

other countries grow tired of U.S. policies.

     The PBOC may not cut the required reserve ratios until Q1 of 2020, as the

current liquidity is sufficient because of surging fiscal spending at the end of

the year, the China Securities Journal said in a commentary. Short-term interest

rates are also dropping despite a 10-day refrain of liquidity injection by OMOs,

the journal said.

     Electric vehicles may account for 25% of new cars sold in 2025 under a

draft vehicle industry development plan from the Ministry of Industry and

Information Technology, the Security Times said. The plan, which is seeking

public input, calls for more tax incentives such as new energy vehicle purchase

taxes, said the newspaper.

--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$$$]