MNI China Daily Summary: Friday, December 13
EXCLUSIVE: German FDI into China will remain robust in 2025, but primarily driven by a handful of German multi-nationals concerned about intensifying local competition and insecure supply chains amid heightened geopolitical risk, an industry leader has told MNI.
POLICY: The People’s Bank of China (PBOC) will focus on preventing excessive volatility of the yuan exchange rate from external shocks, and increase treasury bonds trade to coordinate the proactive fiscal policy in 2025, said Zou Lan, head of the Bank’s monetary policy department, according to CCTV News.
LIQUIDITY: The PBOC conducted CNY205.1 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY14.2 billion after offsetting the maturity of CNY190.9 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.6887% from 1.6927% on Thursday, Wind Information showed. The overnight repo average decreased to 1.4161% from 1.4955%.
YUAN: The currency weakened to 7.2795 against the dollar from 7.2630 on Thursday. The PBOC set the dollar-yuan central parity rate higher at 7.1876, compared with 7.1854 set on Thursday. The fixing was estimated at 7.2732 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 1.7750%, down from Thursday's close of 1.8130%, according to chinamoney.com.cn.
STOCKS: The Shanghai Composite Index fell 2.01% to 3,391.88, while the CSI300 index lost 2.37% to 3,933.18. The Hang Seng Index tumbled 2.09% at 19,971.24.
FROM THE PRESS: Beijing is expected to issue CNY2-3 trillion of special treasury bonds next year to support infrastructure construction and improve public welfare, Securities Times reported, citing Zhang Ming, deputy director at the Institute of Finance, Chinese Academy of Social Sciences, as the Central Economic Work Conference emphasised a more proactive fiscal policy. The deficit-to-GDP ratio will likely reach around 4%, rising from 2024's 3%, said Ming Ming, chief economist at CITIC Securities. Meanwhile, analysts anticipate CNY4 trillion local government special bonds, rising from this year's CNY3.9 trillion as the usage was expanded to purchase unsold properties and idle land for affordable housing, the newspaper said.
China’s central bank will likely increase participation and regulation of the bond and the stock markets, following the Central Economic Work Conference’s call for the PBOC to expand its macro-prudential and financial stability functions, according to Lian Ping, chairman of the China Chief Economist Forum. Lian said the PBOC will use innovative tools to increase long-term funds in the stock market and protect the interests of investors. (Source: Yicai)
China’s exports to the U.S., which grew 8.0% in November, 1.2 percentage points higher than the overall, will remain robust in December as buyers rush orders ahead of expected tariffs in 2025, and sellers increase shipments before the Chinese New Year, 21st Century Business Herald has reported. However, the news outlet noted transport media has remained sufficient, with December’s Shanghai to the U.S. west and east coast shipping rates reaching USD3,309 forty-foot equivalent unit (FEU) and USD4,924, down 1.1% and 0.6% from November. Everbright Securities expects the negative impacts from tariffs in 2025 to become apparent only towards year-end.