MNI China Daily Summary: Friday, March 17

EXCLUSIVE: A former People’s Bank of China deputy governor said further opening of China’s financial markets and the creation of more offshore yuan hubs were needed to attract central banks and foreign investors to hold yuan-denominated assets and grow the international use of the currency.

EXCLUSIVE: China’s reference lending rate is expected to remain steady as the ongoing recovery keeps the central bank on the sideline with ample tools to boost growth if needed, while also monitoring any impact on the yuan or cross-border capital flows from the collapse of Silicon Valley Bank, economists and analysts said.

POLICY: The People’s Bank of China announced a 25bp cut in the reserve requirement ratio on Friday to offer long-term liquidity and support the economic recovery.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY180 billion of operations via 7-day reverse repos, with the rates unchanged at 2.00%. The operation led to a net injection of CNY165 billion after offsetting the maturity of CNY15 billion reverse repos today, 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) decreased to 2.1127% from 2.2066%, Wind Information showed. The overnight repo average decreased to 2.2516% from the previous 2.2969%.

YUAN: The currency strengthened to 6.8765 against the dollar from 6.9018 on Thursday. The PBOC set the dollar-yuan central parity rate lower at 6.9052 on Friday, compared with 6.9149 set on Thursday.

BONDS: The yield on 10-year China Government Bonds was last at 2.8730%, down from Thursday's close of 2.8775%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.73% to 3,250.55, while the CSI300 index rose 0.50% to 3,958.82. The Hang Seng Index was up 1.64% to 19,518.59.

FROM THE PRESS: China's economic recovery lacks stability as the external environment is more complex than last year and confidence among firms and consumers is down, according to Lian Ping, chairman of the China Chief Economist Forum. Speaking at a recent conference, Lian said Federal Reserve interest rate hikes, the Ukraine crisis and instability in the international banking sector is adding to a difficult environment. More needs to be done to support China's real estate sector and to help employment. With more government spending this year, monetary policy should ensure sufficient liquidity to keep the cost of treasury bonds and local special bonds at a low level, he said.

The government is launching initiatives to boost foreign investment into the country, including a series of expos, tours and match-making events aimed at attracting overseas investors, according to the Ministry of Commerce (MOFCOM). Beijing will expand institutional openness and strive to create a market-oriented, legal, and international first-class business environment for foreign firms. Authorities are also working with Chinese exporters to address weakening export demand and increased non-payment risks, as well as supporting business trips abroad to facilitate export business, the ministry said.

China needs policies to support the estimated 147.39 million workers aged between 60-69 years old, which will help alleviate the pressures of ageing on society, according to Yicai. Retirees continuing to work or returning to the labour market face barriers, such as a skills gaps or discrimination. Policies are needed to provide vocational training and guidance services for elderly people who want to work. Additionally, large employers like schools, hospitals and community services, should explore flexible employment models suitable for the elderly. With average lifespans and medical care increasing, the number of elderly working after retirement will increase, the paper said.