I. Yesterday’s News

1. Finance ministry said that China will resolutely curb the rise in hidden local government debt via disguised channels, and require local governments to assume responsibility for repayment of these borrowings, breaking the “illusion” that Beijing would bail out local governments’ hidden debt.

2. China's industrial output is expected to rise by around 6 percent next year, while power consumption is about to cut by 4 percent, Miao Wei, minister of industry and information technology, said. "The country's industrial economy has maintained steady and sound growth thanks to the implementation of the Made in China 2025 strategy. It effectively promoted the integration of manufacturing and new technologies such as the internet, big data and cloud computing," Miao added.

3. China will spare no effort in upgrading the quality of goods and services consumed, maintaining a steady growth in international trade, making efficient use of foreign investment, ensuring Chinese companies invest overseas in an orderly way, deepening economic and trade cooperation among “One Belt One Road” countries, Minister of Commerce Zhong Shan said.

4. China will release green development index, in addition to unemployment report, starting from next year, and add quality efficiency index, new momentum development index as well as such indexes that show the structure and coordination among industries, sectors and regions, said Sheng Laiyun, chief economist of the National Bureau of Statistics.

II. Market Overview
FX

China's yuan firmed against the dollar in the morning session on Monday, but still stayed below Thursday’s highs despite of a bullish sentiment after the official midpoint rates set an over three-month high. Yuan is likely to gradually rise, but needs further clues to see whether the currency could cross over the key mark of 6.55.

Bonds

Yields of cash bonds steadied in China’s interbank market ahead of the New Year, with the yields of 10-year CDB bonds closing higher, while 10-year Treasury bonds were barely traded. Investors were still focusing on cross-year capital.

Stock Market

The Shanghai Composite Index settled lower on Monday, dampened by middle and small caps and expectations for end-of-year tight liquidity, as investors stayed on the sidelines. Market remained weak despite of solid property names.