MNI China Daily Summary: Thursday, February 10

DATA: China's new bank lending rose to a record high in January as the central bank ramped up support for the slowing economy. New loans increased to an historic high CNY3.98 trillion compared to the CNY1.1trillion in December. Aggregate financing was CNY6.17 trillion, almost triple the CNY2.37 trillion in December. M2 growth quickened to 9.8% y/y in January from December's 9.0%, the fastest since February 2021. Among the key metrics, M1 growth fell 1.9% y/y versus the previous 3.5% gain.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY20 billion via 7-day reverse repos with the rate unchanged at 2.10% on Thursday. The operation has led to a net drain of CNY180 billion after offsetting the maturity of CNY200 billion repos today, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.9328% from the close of 1.9886% on Wednesday, Wind Information showed. The overnight repo average fell to 1.6626% from the previous 1.7098%.

YUAN: The currency strengthened to 6.3590 against the dollar from 6.3609 on Wednesday. The PBOC set the dollar-yuan central parity rate lower at 6.3599, compared with 6.3653 set on Wednesday.

BONDS: The yield on the 10-year China Government Bond was last at 2.7280%, up from 2.7218% of Wednesday's close, according to Wind Information.

STOCKS: The Shanghai Composite Index gained 0.17% to 3,485.91, while the CSI300 fell 0.26% to 4,639.86. The Hong Kong's Hang Seng Index rose 0.38% to 24,924.35.

FROM THE PRESS: China’s market watchdogs summoned iron ore consultancies asking them to ensure accuracy and not to fabricate and distribute false information on price gains, the Economic Information Daily reported citing the National Development and Reform Commission. As of Feb. 8, the most-active iron ore futures in China surged over 20% this year, indicating “irregular fluctuations” that may be due to speculation, the newspaper said citing the commission.

China’s local government debt issued in January totaled CNY699 billion, a rise of CNY337 billion from January 2021, which promises to boost investments in infrastructure projects and support growth, the Securities Times said citing Wind data. The so-called special-purpose bonds, geared toward infrastructure building, accounted for 69.3%, with further CNY975.6 billion remaining to be issued in the first quarter, the newspaper said. With the rapid issuances of debt, China’s infrastructure investment may rise as much as 10% in the first half, the newspaper said citing economist Ming Ming of Citic Securities.

The ballooning trade deficit with China recorded by the U.S. last year showed it has no alternative to replace China’s manufacturing powerhouse, the Global Times said in an editorial after data released by the Department of Commerce. The deficit with China last year was $355 billion, up from $310 billion in 2020, the newspaper said. The key to narrowing China-U.S. trade deficit is relaxing restrictions on exports to China, and allowing China to buy what it needs, Global Times said. The U.S. inflation crisis has to do with heavy tariffs on Chinese imports, and if the Biden administration keeps record prices, it is likely to ruin the Democratic Party in the midterm elections, the newspaper said.