MNI China Daily Summary: Friday, March 10

EXCLUSIVE: The incoming People’s Bank of China (PBOC) governor’s immediate task will be to support a recovery amid sluggish domestic demand, while coordinating longer term with a new regulator to manage risks in a financial system burdened with debt after a decade of expansion, policy advisers told MNI.

LIQUIDITY: The PBOC conducted CNY15 billion of operations via 7-day reverse repos, with the rates unchanged at 2.00%. The operation has led to a net drain of CNY3 billion after offsetting the maturity of CNY18 billion reverse repos, according to Wind Information. The operation aims to keep banking system liquidity reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.0253% from 1.9330%, Wind Information showed. The overnight repo average increased to 1.8142% from the previous 1.3805%.

YUAN: The currency strengthened to 6.9653 against the dollar from 6.9699 on Thursday. The PBOC set the dollar-yuan central parity rate lower at 6.9655, compared with 6.9666 set on Thursday.

BONDS: The yield on 10-year China Government Bonds was last at 2.8835%, down from Thursday's close of 2.8950%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 1.40% to 3,230.08, while the CSI300 index fell 1.31% to 3,967.14. The Hang Seng Index was down 3.04% to 19,319.92.

FROM THE PRESS: February's 1.0% y/y increase in the Consumer Price Index should be the lowest result this year, as the economy recovers and prices of housing and services increase, according to the Securities Daily. The low figure was mainly due to the Spring Festival falling in January and depressed prices for pork. The paper said CPI is likely to rise to around 2% in coming months as consumer demand returns and pork prices stabilise, according to the paper. Despite the low increase, deflation is unlikely and the current price level will not hamper macro policy or the expansion of domestic demand and the promotion of consumption.

Beijing’s plans to establish a new National Data Bureau to oversee regulation on data collection and sharing will lead to enhanced public services, more digitalisation, and speed up construction of smart cities, according to Xinhua. Quoting experts, the paper said digitalisation was significant to China's development and the new structure would help Beijing develop a competitive advantage. The reforms, announced during this weeks National People's Congress, will see the new body integrate functions of various departments, which will help coordinate the development of the digital economy, according to the paper.

Small and medium sized banks in China are facing pressure to ensure asset quality and control risks, according to a financial expert interviewed by Shanghai Securities News on the sidelines of the National People’s Congress. To improve the situation, the delegate said market-based approaches to clearing and asset restructuring should be allowed. The disposal of non-performing assets should be accelerated, and banks should focus on actual market demand and serve the real economy.