MNI China Daily Summary: Friday, February 17

EXCLUSIVE: China’s loan prime rate is expected to remain unchanged this month as credit continues to expand amid a robust economic rebound, though the key reference rates could be lowered if the recovery falters, economists and advisers said

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY835 billion of operations via 7-day reverse repos, with the rates unchanged at 2.00%. The operation led to a net injection of CNY632 billion after offsetting the maturity of CNY203 billion reverse repos today, according to Wind Information. The operation aims to keep banking system liquidity reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) edged up to 2.2492% from 2.1285% on Thursday, Wind Information showed. The overnight repo average increased to 2.1476% from the previous 2.0410%.

YUAN: The currency closed at 6.8818 against the dollar at 16:30pm Beijing time from 6.8516 on Thursday. The PBOC set the dollar-yuan central parity rate higher at 6.8659, compared with 6.8519 set on Thursday.

BONDS: The yield on the 10-year China Government Bond was last at 2.9025%, down from Thursday's close of 2.9090%.

STOCKS: The Shanghai Composite Index fell 0.77% to 3224.02, while the CSI300 index was down 1.44% to 4,034.51. The Hang Seng Index was down 1.28% to 20,719.81.

FROM THE PRESS: The fiscal revenue outlook for 2023 remains “uncertain” as the foundation for economic recovery is not yet solid, according to Finance Minister Liu Kun. In a recent article in state media, Liu said he expected revenue to increase moderately in 2023 despite the uncertainty, owing to an increase in economic activity and due to 2022 being a low base year, according to a report by Shanghai Securities News. This year's taxation policy will focus on stimulating domestic demand, supporting SMEs and strengthening people’s livelihoods. Liu mentioned the important role for local government special bonds and central infrastructure investment whilst preventing blind expansion of investment and encouraging more private capital participation.

House prices in tier-one cities increased slightly month-on-month in January, and the rate of price decreases in tier-two and three cities slowed, according to the Securities Daily. The paper said the improvement in data recently released by the National Bureau of Statistics showed recent measures taken in some regions, such as lowering the interest rate for first time homeowners before the Spring Festival, was having positive results, but more demand-side policy was needed for the market to recover. Daily transactions in February of secondhand houses were up by 1% on average compared with January, indicating further momentum in the recovery, the paper said.

Banks are encouraged to adjust down payment ratios, interest rates, and their tolerance of non-performing loans to support the logistics industry during the economic recovery, according to a circular posted on the PBOC website. The Securities Daily mentioned the logistics industry is the lifeblood of the economy, and the measures will allow the sector to improve operational efficiency and reduce transport costs. The central bank said it would encourage logistics firms to issue corporate credit bonds and reduce financing costs.