MNI China Daily Summary: Friday, March 1

EXCLUSIVE: China will likely set its inflation target at around 3% y/y for 2024, despite the real level likely printing closer to about 1% due to sluggish demand, which will boost the chance of further central bank policy action, advisors and economists told MNI.

POLICY: The People’s Bank of China will facilitate mobile payments for foreign visitors by simplifying processes for linking overseas bank cards to mobile payment applications and increasing payment limits, Zhang Qingsong, deputy governor of the PBOC, told reporters.

POLICY: China's Caixin manufacturing PMI registered 50.9 in February, up 0.1 point from January, staying in the expansionary zone above the breakeven 50 mark for a fourth month, driven by pro-growth policies, the financial publisher said.

POLICY: China's manufacturing Purchasing Managers' Index declined by 0.1 point to 49.1 in February, remaining in the contractionary zone below the breakeven 50 mark for the fifth month, amid the traditional off-season due to Chinese New Year holiday, data from the National Bureau of Statistics showed.

LIQUIDITY: The PBOC conducted CNY10 billion via 7-day reverse repo, with rates unchanged at 1.80%. The operation has led to a net drain of CNY237 billion after offsetting CNY247 billion in maturities, according to Wind Information.

RATES: China's seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.8197% from 1.7667%, Wind Information showed. The overnight repo average increased to 1.6985% from 1.6277%.

YUAN: The currency weakened to 7.1985 against the dollar from 7.1930 on Thursday. The PBOC set the dollar-yuan central parity rate higher at 7.1059, compared with 7.1036 set on Thursday.

BONDS: The yield on 10-year China Government Bonds was last at 2.4325%, up from 2.4100% at Thursday's close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.39% to 3,027.02 while the CSI300 index rose 0.62% to 3,537.80. The Hang Seng Index was up 0.47% to 16,589.44.

FROM THE PRESS: Authorities at the National People's Congress will target around 5% GDP growth this year to raise expectations and avoid a negative confidence spiral, according to analysts and experts interviewed by Yicai. Zhang Jun, chief economist at China Galaxy Securities, expects authorities to set the country's deficit rate at 3.5% of GDP and noted that after two years of decline, the real-estate sector will have less drag on the economy than before. NPC members Gao Zicheng, president of the All-China Lawyers Association, and Cao Peng, chairman of JD.com's technical committee, both said they will propose more support for private enterprises at the congress.

The Chinese economy will experience little pressure on capital supply and demand in March, while some pressure may be seen during the quarter-end assessment for banks, Securities Daily reported, citing analysts from CITIC Securities. The scale of new government bonds is similar to last year’s level. Meanwhile, banks may further lower deposit rates to reduce their liability cost, while credit issuance will slow from the beginning of the year.

Up to 276 cities in 31 provinces have launched a real-estate financing mechanism to propose about 6,000 housing projects eligible for funding to commercial banks within their regions by the end of February, China News Service reported, citing the Ministry of Housing and Urban-Rural Development. Over CNY200 billion of loans have been granted so far. The ministry urged all prefecture-level cities to establish the mechanism by mid-March, while financial institutions should strengthen the closed-loop management and prevent loans from being misappropriated, the newswire said.