MNI China Daily Summary: Friday, January 24
EXCLUSIVE: Increased supply will drive Chinese pork prices 10% lower in 2025 and weigh on inflation, following 2024’s 7.7% rise, an agricultural ministry advisor told MNI.
EXCLUSIVE: Domestic retail sales of passenger vehicles are expected to increase 2% y/y to 23.4 million units in 2025, slower than 2024’s 5.7% growth, with weakness felt most over Q1, a Chinese auto-industry expert told MNI, noting new energy vehicle (NEV) sales will increase their market share significantly.
EXCLUSIVE: China will need to provide around an additional CNY3 trillion in fiscal funds in 2025 alongside greater economic reforms to maintain 5% GDP growth, a senior policy advisor told MNI, adding Beijing should raise the deficit-to-GDP ratio 100 basis points to about 4%.
POLICY: China’s electricity demand is expected to grow 6% this year to 10.4 trillion kWh, slower than the 6.8% increase in 2024, Chinese state-media outlet Xinhua has reported, citing a China Electricity Council report released today.
LIQUIDITY: The PBOC conducted CNY284 billion via 14-day reverse repos, with the rate unchanged at 1.65%. The operation led to a net injection of CNY179 billion after offsetting the maturity of CNY105 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 2.1113% from 2.1213% on Thursday, Wind Information showed. The overnight repo average decreased to 1.7859% from 1.7989%.
YUAN: The currency strengthened to 7.2412 against the dollar from 7.2874 on Thursday. The PBOC set the dollar-yuan central parity rate lower at 7.1705, compared with 7.1708 set on Thursday. The fixing was estimated at 7.2804 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 1.6500%, up from Thursday's close of 1.6455%, according to chinamoney.com.cn.
STOCKS: The Shanghai Composite Index edged up 0.70% to 3,252.63, while the CSI300 index increased 0.77% to 3,832.86. The Hang Seng Index was up 1.86% to 20,066.19.
FROM THE PRESS: Zhengzhou city’s residential housing inventory decreased by 4.7 million square meters by end-2024, 20% lower than end-2023, as authorities have issued urban resettlement housing vouchers since October 2024. As of Jan 9, a total of 23,700 housing vouchers worth CNY15 billion have been handed out, resulting in home sales of 1.3 million square meters, the newspaper said. The scheme helped to accelerate homebuyers’ entry into the market, concerned that voucher holders would buy up good properties.
Additional funds in the stock market from medium- and long-term institutions are expected to reach about CNY1.82 trillion this year, according to Yicai.com. The article, citing Wu Zhaoyin, chief investment officer of Soochow Futures, said insurance, mutual, and social security funds, along with dividends from listed companies will provide the increase. The boost follows authorities' plans to raise the proportion of A-share investments by medium- and long-term funds gradually. Officials can attract investment by increasing dividends and share repurchasing to improve long-term returns, as well as strengthening information disclosure and corporate governance, the newspaper said, citing analysts.
Several provinces have indicated strong confidence in consumption this year by setting retail sales growth targets of above 5%, said Tian Lihui, dean at Nankai University. Economically developed provinces such as Henan are targeting 6%, while Jiangsu, Zhejiang, Guangdong, and Sichuan are about 5.5%. Henan Province plans to use the government subsidy scheme to update 500,000 cars, 8 million home appliances, implement 3,000 equipment renewal projects, and increase industrial equipment investment by 10%.