MNI China Daily Summary: Friday, July 12

POLICY: China's exports rose 8.6% y/y in June, beating the 8.0% market consensus and accelerating from May’s 7.6%, with H1 expansion totalling 3.6%, data released by Customs showed.

POLICY: China’s steel exports slowed slightly in June to 8.745 million tonnes, reducing year-to-date growth to 24.0% in H1, from 24.7% in May, according to customs data.

LIQUIDITY: The PBOC conducted CNY2 billion via 7-day reverse repo, with the rates unchanged at 1.80%. The operation has led to no change to the liquidity after offsetting the CNY2 billion maturity today, according to Wind Information.

RATES: China's seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.8047% from 1.8013%, Wind Information showed. The overnight repo average increased to 1.6758% from 1.6734%.

YUAN: The currency strengthened to 7.2585 against the dollar from 7.2710 on Thursday. The PBOC set the dollar-yuan central parity rate lower at 7.1315, compared with 7.1339 set on Thursday.

BONDS: The yield on 10-year China Government Bonds was last at 2.2150%, down from 2.2225% at Thursday's close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.03% to 2,971.30 while the CSI300 index rose 0.12% to 3,472.40. The Hang Seng Index was increased 2.59% to 18,293.38.

FROM THE PRESS: China’s GDP growth may slow to 5.04% in Q2 from Q1’s 5.3%, due to weak demand, economists told Yicai.com. Economists expect industrial output to grow 4.94% in June, compared to May’s 5.6%, amid declines in industrial profits and manufacturing activity. Retail sales may fall slightly to 3.63%, from May's 3.7%. Economists also predicted a 3.84% gain in Jan-June fixed-asset investment, lower than the previous 4%, with policy support for manufacturing investment remaining robust to help offset real estate investment decline. June macroeconomic data will be released next Monday.

SOEs have increased restructuring activity by 120% y/y so far this year, China Securities Journal reported. Technology-based SOEs may lead the next M&A boom given policymakers’ call to develop “new quality productive forces”. Firms in chemical, electric power and public utilities were particularly active, and would enhance their competitiveness by integrating with “new economy” firms in internet software and medical equipment sectors, the Journal said, citing analysts.

Beijing hopes the EU can “face the fact” that China's EV competitive advantage does not come from subsidies, and make reasonable and objective decisions, He Yongqian, a spokesperson for the Ministry of Commerce said late Thursday. Speaking to reporters, He said China-EU automobile cooperation was conducive to common development, with EU industry opposing trade protectionist measures. Regarding China’s investigation on EU brandy imports, the ministry will listen to opinions and arguments from EU exporters at a July 18 meeting, He noted.