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TOP NEWS: China needs to advance the opening up of its financial sector
amid an "extremely complicated and uncertain international and domestic economic
environment," a senior China banking and insurance watchdog said Wednesday.
Instead of stepping back from globalization amid increasing protectionism,
opening up and cooperation are needed to prevent a future financial crisis, Wang
Zhaoxing, the vice chairman of the China Banking and Insurance Regulatory
Commission told a forum in Beijing. (See full story:
DATA: China's Industrial production grew 5.9% y/y in October, picking up
from the three-year-low 5.8% recorded in September. FAI grew 5.7% in the Jan-Oct
period, continuing to expand from Jan-September's 5.8% gain and recover from a
series low of 5.3% in Jan-Aug period (since the data first compiled in 1992).
Retail sales growth fell to a 5-month-low of 8.6% y/y in October, decreasing
from the 9.2% growth reported in September.
LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations
(OMOs) Wednesday, leaving liquidity unchanged, as no reverse repos matured,
according to Wind Information. The central bank said liquidity in the banking
system is at a reasonable and ample level.
RATE: The 7-day weighted average interbank repo average rate for depository
institutions (DR007) decreased to 2.6144% from Tuesday's close of 2.6326%, Wind
Information showed. The overnight repo average decreased to 2.3132% from
YUAN: The yuan closed at 6.9527 against the U.S. dollar from Tuesday's
close of 6.9531. The PBOC set the yuan central parity rate at 6.9402 on
Wednesday, picking up from Tuesday's 6.9629.
BONDS: The yield on the benchmark 10-year China Government Bond was last at
3.4175%, down from the closing price of 3.4650% on Tuesday, according to Wind
STOCKS: The benchmark Shanghai Composite Index closed 0.85% lower at
2,632.24. Hong Kong's Hang Seng Index decreased 0.54% to 25,654.43.
FROM THE PRESS: China's October fiscal revenue fell year-on-year for the
first time this year, weighed by tax and fee cuts, as well as VAT reform, Xinhua
news agency said late Tuesday, citing Zhang Lianqi, a fiscal and taxation
expert. Fiscal revenue was CNY1.572 billion in October, down 3.1% y/y on October
2017, with tax revenue down by 5.1% y/y to CNY1.346 billion, Xinhua said, citing
Finance Ministry data. (Link to the story: https://bit.ly/2DCRO4T)
China's fiscal deficit rate should be increased to 4%, The Paper said
Wednesday, citing Yao Yudong, former director of the Financial Research
Institution of The People's Bank of China on Tuesday. Chinese small and
medium-size banks have insufficient collateral to apply to the Medium-term
Lending Facility (MLF), so liquidity released by the central bank can't reach
the real economy. A 4% deficit rate is reasonable and can mitigate the risk of a
lack of collateral, the newspaper said citing Yu. (Link to the story:
China is expected to meet its target of cutting at least 500 million tons
of coal production capacity and 150 million tons of crude steel capacity two
years ahead of schedule, the Economic Information Daily (Xinhua news subsidiary)
said Wednesday citing an anonymous insider. Along with its campaign to cut
overcapacity, China is also facing the problem of insufficient supply of future
capacity, EID said. Therefore, the total capacity to be reduced next year will
be lowered and the campaign will focus on structural optimization of production
capacity, as the government aims to gradually replace the obsolete capacity with
advanced ones, the newspaper said. (Link to the story: https://bit.ly/2DkKKJu)
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