MNI China Daily Summary: Friday, March 24

EXCLUSIVE: The People’s Bank of China (PBOC) needs to carefully weigh additional cuts to the reserve requirement ratio to ensure Chinese lenders have adequate buffers against any possible liquidity risk, sharpening regulators’ focus on banks’ liquidity management and investments, policy advisers and economists said.

LIQUIDITY: The PBOC conducted CNY7 billion of operations via 7-day reverse repos, with the rates unchanged at 2.00%. The operation led to a net drain of CNY173 billion after offsetting the maturity of CNY180 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 1.6982% from 1.9178%, Wind Information showed. The overnight repo average decreased to 1.2697% from the previous 1.5337%.

YUAN: The currency weakened to 6.8655 against the dollar from 6.8289 on Thursday. The PBOC set the dollar-yuan central parity rate lower at 6.8374, compared with 6.8709 set on Thursday.

BONDS: The yield on 10-year China Government Bonds was last at 2.8875%, up from Thursday's close of 2.8750%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.64% to 3,265.65, while the CSI300 index decreased 0.30% to 4,027.05. The Hang Seng Index fell 0.67% to 19,915.68.

FROM THE PRESS: The National Development and Reform Commission (NDRC) has launched a High Quality Development and Common Prosperity Demonstration Zone, in Zhejiang province, according to 21st Century Herald. The zone will focus on advanced manufacturing, with heavy use of robots in workshops and factories. The zone will promote the application of industrial internet, and transform firms from "manufacturing" to "intelligent manufacturing". Total labor productivity, and R&D investment intensity will be core indicators, as well as metrics on carbon emissions and environmental protection. Underdeveloped regions will be supported through improving transportation infrastructure, and building industrial parks and enclaves.

The China Banking and Insurance Regulatory Commission (CBIRC) released its final version of reforms for the trust industry that will see firms in the sector classified into separate categories, each with distinct rules, according to the 21st Century Herald. Trust companies will have to submit plans to the CBIRC and enter a three-year transition period to ensure an orderly adaptation and exit non-compliant business . The final version remains largely unchanged from the previous draft version, with wording added to obligate firms to ensure investor awareness of the nature of the trust industry, according to the Herald.

China does not seek to engineer a trade surplus with the US and views its trading relationship as determined by multiple factors such as different economic structures, the international division of labor, and U.S. export controls to China, according to a Ministry of Commerce (MOFCOM) spokesperson. China called on the U.S. to remove trade restrictions on China, which is beneficial to both sides. In recent years Beijing has imported a large number of agricultural products, automobiles, technology, energy and petrochemical products from the U.S. based on market demand. The spokesperson said forcing the sale of TikTok would undermine the confidence of foreign investors in the U.S. and should be opposed.