MNI China Daily Summary: Friday, December 15

EXCLUSIVE: China will implement more moderate and targeted fiscal and monetary policy in 2024 as it aims to keep GDP expanding at 5%, while limiting risk and cultivating new drivers of high-quality growth, policy advisors told MNI.

DATA: Consumption continued to accelerate, hitting a six-month high in November, with retail sales growth rising to 10.1% y/y from 7.6%, but underperforming expectations for 12.8%, data released by the National Bureau of Statistics (NBS) showed. Industrial production rose 6.6% y/y, the quickest expansion since June 2021 (8.3%), up from October's 4.6% and beating the 5.8% forecast. Fixed-asset investment over the first 11 months registered a 2.9% y/y increase, flat from October's reading and remaining at the lowest level since December 2020 (2.9%). The figure slightly missed the 3.0% consensus.

POLICY: China will not experience deflation as the government expects demand and the economy to improve gradually, according to NBS spokesperson Liu Aihua.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY1.45 trillion in 1-year MLF and CNY50 billion via 7-day reverse repos, with the rates unchanged at 2.50% and 1.80% respectively. Today's MLF led to a net injection of CNY800 billion after offsetting maturities of CNY650 billion, the biggest daily injection on record. The reverse repo operation led to a net drain of CNY147 billion, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.7870% from 1.8239% on Thursday, Wind Information showed. The overnight repo average fell to 1.5902% from 1.6167%.

YUAN: The currency strengthened to 7.0987 against the dollar from 7.1301 on Thursday. The PBOC set the dollar-yuan central parity rate lower at 7.0957, compared with 7.1090 set on Thursday. The fixing was estimated at 7.1178 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bond was last at 2.6525%, down from Thursday's close of 2.6600%, according to Wind Information.

STOCKS: The Shanghai Composite Index fell 0.56% to 2,942.56 while the CSI300 index edged down 0.31% to 3,341.55. Hang Seng Index rallied 2.38% to 16,792.19.

FROM THE PRESS: Beijing and Shanghai have rolled out a fresh round of housing stimulus, including lower downpayment ratios and extensions of deadlines for mortgage repayments. The downpayment for first-time home buyers was cut to 30% from the previous 35-40%, and second-home deposits were reduced to 40-50% from the previous 50-80%. The two major cities' abandonment of strict policies will likely boost transactions and stabilise house prices, said Chen Wenjing, market research director at China Index Academy. The mortgage rates in both cities for first homes were reduced by 45 bp to as low as 4.1%, and the maximum loan period in Beijing was extended to 30 years from 25 years. (Source: Yicai)

China should promote large-scale equipment upgrades and replacement of consumer goods to expand domestic demand, said Zhang Yongjun, economist at the China Center for International Economic Exchange. China should boost consumption of new energy vehicles, green building materials and smart home appliances, especially in rural areas. It is necessary to create conditions for consumption upgrades, such as by building more charging piles for electric cars in small cities, towns and the countryside. (Source: 21st Century Business Herald)

Chinese residents made 3.67 billion domestic trips in the first three quarters, with tourism revenue reaching CNY3.7 trillion, rising 114%, said Du Jiang, vice minister at culture and tourism. The number of commercial performances and revenues grew over 121% and 84% over Jan-Sep when compared to the same period in 2019. China is also set to launch an inbound tourism promotion plan to provide visitors with high-quality tourism products and services, the ministry said. (Source: Securities Daily)