MNI Indicators: MNI China Liquidity Index™ – December Liquidity Boost

Key Points – December Report

China’s interbank liquidity conditions eased in December as the central bank injected a record amount of funds to counteract large government bond issuance and to prepare for peak season demand.

On the economy, local traders remained cautious despite reasonable November economic data but expect more PBOC action to sure up the recovery in 2024, the latest MNI Liquidity Conditions Index showed.

• The MNI China Liquidity Condition Index eased to 41.5 from November’s 56.4, with 36.6% of traders reporting looser conditions versus 20.5% previous. 
• The MNI China Economy Condition Index increased to 64.6 in December from 60.3 previous, with 46.3% of traders seeing an improvement versus 17.1% who noted a decline. 
• The MNI China PBOC Policy Bias Index read 34.1, with 68.3% of local traders expecting the PBOC to maintain prudent monetary policy.

The MNI survey collected the opinions of 41 traders with financial institutions operating in China's interbank market, the country's main platform for trading fixed income and currency instruments, and the main funding source for financial institutions. Interviews were conducted from December 4 – December 15.