MNI China Daily Summary: Friday, July 19

POLICY: China will strengthen fiscal efforts and maintain an accommodative monetary stance to boost the economy, which is suffering from insufficient demand, said Han Wenxiu, deputy director in charge of routine work at the Office of Central Financial and Economic Affairs Commission in a press conference on Friday.

POLICY: China will aim to expand consumer demand and quicken the development of emerging industries to help offset the property slowdown and rising trade tensions, said Han.

POLICY: China plans to promote public services for migrant workers while pushing reform of household registrations, or the Hukou system, and advancing market-oriented reforms in monopoly sectors, said Han.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY59 billion via 7-day reverse repo, with rates unchanged at 1.80%. The operation led to a net injection of CNY57 billion after offsetting the CNY2 billion in maturities today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.8682% from 1.8973% on Thursday, Wind Information showed. The overnight repo average decreased to 1.8646% from 1.9435%.

YUAN: The currency weakened to 7.2672 against the dollar from 7.2572 on Thursday. The PBOC set the dollar-yuan central parity rate higher at 7.1315, compared with 7.1285 on Thursday. The fixing was estimated at 7.2713 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.2530%, down from Thursday's close of 2.2625%, according to chinamoney.com.cn.

STOCKS: The Shanghai Composite Index edged up 0.17% to 2,982.31, while the CSI300 index was up 0.51% to 3,539.02. The Hang Seng Index lost 2.03% to 17,417.68.

FROM THE PRESS: China will further centralise fiscal power and increase central government expenditure to reduce burdens on local authorities, which will likely obtain more sources of tax income, including by localisation of consumption taxes, China Securities Journal reported, citing analysts. The Party’s Third Plenum announced reforms to the fiscal, taxation and the financial system on Thursday. Analysts pointed out the supervision of the financial sector will be further strengthened to prevent risks. Monetary policy will shift focus to interest-rate control from the previous liquidity and credit management, while the capital market will be boosted to enhance its support for the real economy, they said.

China is likely promote the restructuring and mergers of small- and medium-sized banks and optimise policies to broaden channels to boost their capital, the Economics Daily reported. As the Third Plenum aimed to prevent the risks of small banks, the report said issuance thresholds for capital instruments should be lowered so long as risks permit, and warned that small banks are suffering from narrowed net interest margins. Only a few small banks can list on the equity market, and thresholds for issuing perpetual bonds and preferred stocks are also high, it said.

Residents in 10 out of 31 provinces in mainland China have seen per capita disposable income exceed CNY20,000 in the first half of the year, Yicai.com reported, citing data from the National Bureau of Statistics. The per capita disposable income across the country was CNY20,733, a rise of 5.3% after deducting price factors. Shanghai and Beijing were the top two cities, with the figure reaching CNY44,735 and CNY43,084, due to the concentration of high-income industries, the newspaper said.