MNI China Daily Summary: Friday, January 17
EXCLUSIVE: The People's Bank of China (PBOC) will limit any sharp depreciation of the yuan in response to uncertainties arising from potential U.S. tariffs and as Federal Reserve easing expectations recede, advisors and economists told MNI, adding the Chinese currency should avoid the significant fall seen during Donald Trump's first presidency.
EXCLUSIVE: China's Loan Prime Rate is likely to hold Monday as the central bank prioritizes the yuan's stability while curbing any rapid drop in treasury yields, which are expected to restrain its easing pace. The one-year LPR will hold at 3.1%, while the five-year rate will remain at 3.6%.
POLICY: China’s upcoming Spring Festival will raise demand for food and consumption activities, providing favourable conditions to increase the nation's CPI, said Fu Linghui, director at the National Bureau of Statistics.
DATA: The Chinese economy grew by 5.4% in Q4, rising 0.8 percentage points from Q3 and driving 2024's growth to the government's 5% annual target, beating market expectations of 5.0% and 4.9%, data released by the NBS showed.
LIQUIDITY: The PBOC conducted CNY105 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY100.5 billion after offsetting the maturity of CNY4.5 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 2.1244% from 2.3391% on Thursday, Wind Information showed. The overnight repo average increased to 1.8592% from 1.8585%.
YUAN: The currency strengthened to 7.3284 against the dollar from 7.3317 on Thursday. The PBOC set the dollar-yuan central parity rate higher at 7.1889, compared with 7.1881 set on Thursday. The fixing was estimated at 7.3314 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 1.6400%, up from Thursday's close of 1.6357%, according to chinamoney.com.cn.
STOCKS: The Shanghai Composite Index edged up 0.18% to 3,241.82, while the CSI300 index rose 0.31% to 3,812.34. The Hang Seng Index was up 0.31% at 19,584.06.
FROM THE PRESS: Over 73% of 60 economists surveyed by Securities Times expect the yuan to mostly trade within 7.3-7.5 against the U.S. dollar in the first half of 2025, while 18% expect a range of 7.1-7.3, the newspaper reported. Economists believe the central bank has a sufficient toolbox and rich experience to deal with yuan depreciation and can maintain the currency's stability at an equilibrium, the Times said.
President Xi Jinping’s special representative, Vice President Han Zheng, will attend the inauguration ceremony of President-elect Donald Trump on Jan 20 in Washington, following the U.S.'s invitation, according to a statement on the Ministry of Foreign Affairs website. China stands ready to work with the new U.S. government to enhance dialogue, manage differences, expand mutually beneficial cooperation, and pursue a stable, healthy and sustainable relationship, the statement said.
Guangdong, Shandong and Hunan provinces will aim to achieve 6% y/y or above in industrial production growth in 2025, as major regions continue to shoulder the responsibility of ensuring stable growth of the industrial economy in the face of increased uncertainties, Yicai.com reported. Local governments are required to take into account the transformation of traditional industries, the development of emerging industries and the layout of future industries, the newspaper said. Industrial production is expected to grow about 5.7% in 2024, according to the prediction of the Ministry of Industry and Information Technology.