MNI China Daily Summary: Friday, July 5

POLICY: Hundreds of billions of yuan worth of treasury bonds are available for the People’s Bank of China (PBOC) to borrow from financial institutions, according to Financial News, a paper run by the central bank on Friday. The PBOC has signed agreements and will borrow the medium- to long-term bonds using an open-ended, credit-based method. “(The Bank) will continue to borrow and sell treasury bonds based on market conditions,” the report said.

LIQUIDITY: The PBOC conducted CNY2 billion via 7-day reverse repo, with the rates unchanged at 1.80%. The operation has led to a net drain of CNY48 after offsetting the CNY50 billion maturity today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.8089% from 1.8045% on Thursday, Wind Information showed. The overnight repo average increased to 1.7628% from the previous 1.7181%.

YUAN: The currency strengthened to 7.2674 against the dollar from 7.2698 on Thursday. The PBOC set the dollar-yuan central parity rate lower at 7.1289, compared with 7.1305 set on Thursday. The fixing was estimated at 7.2702 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.2650%, up from Thursday's close of 2.2470%, according to chinamoney.com.cn.

STOCKS: The Shanghai Composite Index edged down 0.26% to 2,949.93, while the CSI300 index was down 0.43% to 3,431.06. The Hang Seng Index lost 1.27% to 17,799.61.

FROM THE PRESS: China can improve local government tax revenue stability by reforming consumption tax sharing between central and local governments into a local tax, 21st Century Business Herald reported citing Ma Guangrong, deputy dean of the School of Finance, Renmin University. Authorities could move tax collection from production to wholesale and retail stages, and expand the taxable scope to include more items, said Ma. Ma also suggested giving municipal and county governments greater autonomy in debt raising, which requires improved information disclosure to allow investors to effectively price bonds and launching pilot schemes in developed regions first, Ma added.

Beijing welcomes U.S. companies to invest and deepen their presence in the Chinese market, Vice Minister of Commerce Wang Shouwen has said. Speaking with U.S. business representatives in Beijing, Wang said China hopes to create a good policy and trade environment with the United States, and share the dividends of development with U.S. firms. Wang believed the heads of state meeting in San Francisco had set the direction of economic relations between the two countries. (Source: Yicai)

China's e-commerce logistics index reached 114.8 points in June, up 0.9 points m/m, marking the fourth consecutive increase, according to the China Logistics Information Center (CLIC). Liu Yuhang, director at the CLIC, said the results showed consumption expectations were improving. The total business volume sub-index read 132.9 points, up 3.1 points m/m, while the rural e-commerce sub-index hit 132.1 points, up 2.4 points m/m. (Source: Securities Daily)