MNI China Daily Summary: Wednesday, November 21

     EXCLUSIVE: Chinese government advisors and former trade officials are

optimistic ahead of a meeting between President Xi Jinping and his U.S.

counterpart Donald Trump set for the end of the month, but gloomy about the

longer-term outlook for the trade dispute between two nations with very

different strategic and economic interests. "The outcome of the Xi-Trump meeting

will certainly be positive," a former high-level Ministry of Commerce official

told MNI, requesting anonymity. The meeting is so high profile that a failure

would embarrass both sides, the official said, adding that it was less certain

whether lower-level talks following the G20 meeting would be fruitful. (See full

story: https://www.marketnews.com/node/1838365)

     POLICY: China's economic growth may slow to 6% by 2020 as the size of the

labour force continues a decline started in 2010, a senior official at a leading

research institution said in Beijing late Tuesday. China's potential growth rate

could decline by 2020, although it is expected to average around 6.2% between

2016 and 2020, said Cai Fang, deputy director of Chinese Academy of Social

Sciences. "So even if growth dropped to 6% in a few years, it is still a decent

level and we won't have to worry about unemployment," Cai said without further

explanation.(See full story: https://www.marketnews.com/node/183837)

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

(OMOs) for the 19th straight day Wednesday, leaving liquidity unchanged, as no

reverse repos mature, according to Wind Information. The central bank said

liquidity in the banking system remains reasonable and ample.

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

institutions (DR007) decreased to 2.6472% from Tuesday's close of 2.6698%, Wind

Information showed. The overnight repo average decreased to 2.5689% from

Tuesday's 2.6011%.

     YUAN: The yuan appreciated to 6.9385 against the U.S. dollar from Tuesday's

close of 6.9393. The PBOC earlier set the dollar/yuan central parity rate weaker

for a second day at 6.9449 Wednesday, compared with Tuesday's 6.9280.

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

3.3675%, down from the closing price of 3.3750% on Tuesday, according to Wind

Information.

     STOCKS: The benchmark Shanghai Composite Index closed 0.21% higher at

2,651.51. Hong Kong's Hang Seng Index increased 0.51% to 25,971.47.

     FROM THE PRESS: Instead of expanding the fiscal deficit by cutting taxes

and fees, the government should stick with their 3% deficit-to-GDP ratio in

2019, but instead reduce spending to make room for tax cuts, the 21st Century

Business Herald said in a commentary published Wednesday. According to the

paper, the thinking behind recent calls for an increased deficit is to underpin

growth, but such thinking has helped fuel the build up in local government debt

and excessive leverage ratio at SOEs. The government should focus away from

debt-driven economic growth and look to link boosting spending with fiscal

reform instead, the newspaper said. (Link to the story: https://bit.ly/2FzEArt)

     The equity pledge risks of listed companies is being effectively resolved,

as the A-share market recovers after a government-led bailout, the Financial

News, a newspaper run by the People's Bank of China, said Wednesday. This month,

more than 200 listed companies have said their equity pledge risks were eased,

according to the paper's calculation. The option for large shareholders to

transfer equity, or the introduction of strategic investors, has become one of

the main ways for listed firms to resolve their pledge risks, the newspaper

said. (Link to the story: https://bit.ly/2R1z1Dp)

     Residential housing sales in tier-one cities fell 3% m/m in the first half

of November, with tier-three and tier-four cities suffering an even sharper 20%

fall, the Securities Daily reported on Wednesday, citing data released by

Shanghai E-House Real Estate Research Institute. Sales in second-tier cities in

the eastern region, mainly Qingdao, Hefei and Nanjing cities increased by 27%,

as tough regulations on pre-sell permits and online contract signing were

relaxed, the newspaper said. Developers will soon accelerate promoting new real

estate projects to help ease funding concerns. But the housing market will

continue to cool, as the recent regulation is unlikely to relax, the newspaper

said, citing Shen Xin, an analyst at E-House. (Link to the story:

https://bit.ly/2FByTJF)

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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