MNI China Daily Summary: Friday, February 14
EXCLUSIVE: China must ensure 5% y/y GDP growth in 2025 through strong fiscal expansion, monetary easing and infrastructure investment to boost domestic demand as U.S. tariffs drive export uncertainty, a prominent economist said, noting the yuan is unlikely to suffer sharp depreciation despite its current short-term volatility.
DATA: Banks extended CNY5.13 trillion in new loans in January, up from December's CNY990 billion and outperforming the CNY4.53 trillion forecast, data released by the People's Bank of China (PBOC) showed. Total social financing rose by CNY7.06 trillion, higher than growth of CNY2.86 trillion in December and the CNY6.50 trillion expectation.
DATA: China’s real estate lending bounced back in 2024 as the country strengthened policy support to the sector, data on the PBOC website showed.
POLICY: China’s machinery industry expects foreign trade to remain stable in 2025, after growing 7.5% last year, accounting for 19% of the country's goods trade, Luo Junjie, executive vice president of the China Machinery Industry Federation, told a conference.
LIQUIDITY: The PBOC conducted CNY98.5 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY85.2 billion after offsetting the maturity of CNY183.7 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.9412% from 1.8199% on Thursday, Wind Information showed. The overnight repo average increased to 1.9135% from 1.8635%.
YUAN: The currency strengthened to 7.2654 against the dollar from 7.3089 on Thursday. The PBOC set the dollar-yuan central parity rate lower at 7.1706, compared with 7.1719 set on Thursday. The fixing was estimated at 7.2769 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 1.6550%, up from Thursday's close of 1.6280%, according to chinamoney.com.cn.
STOCKS: The Shanghai Composite Index edged up 0.43% to 3,346.72, while the CSI300 index increased 0.87% to 3,939.01. The Hang Seng Index was up 3.69% to 22,620.33.
FROM THE PRESS: Major eastern provinces expect their general public budget revenue to increase around 3% in 2025, lower than the anticipated economic growth rate, but higher than last year’s 1.3%, according to 21st Century Business Herald. Guangdong, Jiangsu, Zhejiang, Shanghai, Shandong and Beijing are expected to grow by 3%, 2%, 2%, 2%, 3%, and 4%, the Herald noted. Bai Yanfeng, professor at the Central University of Finance and Economics, noted that proactive fiscal policies in 2025, including a higher deficit ratio will stimulate economic recovery.
The shrinking scale of the People’s Bank of China’s assets demonstrates innovative monetary policy tools such as treasury trades and outright repos replacing traditional tools and not monetary tightening, China Securities Journal reported citing analysts. After the central bank released a large amount of liquidity by reducing the reserve requirement ratio, authorities will drain funds through its medium-term lending facility, while banks repay debts such as high interest MLF loans, the newspaper said citing Wang Jian, analyst at Guosen Securities. The total assets of PBOC were CNY44.1 trillion by end-2024, a decrease of about CNY1.6 trillion from end-2023.
China’s policies supporting science and tech innovation, and the manufacturing sector received tax and fee deductions totalling CNY2.6 trillion in 2024, data from the State Taxation Administration showed. Last year, sales revenue for domestic high-tech and manufacturing industries increased 9.6 and 2.2 percentage points quicker than the overall economic growth rate, the Administration added. (Source: Securities Daily)