MNI China Daily Summary: Friday, November 29
EXCLUSIVE: Beijing will look to use dissatisfaction with U.S. trade policies next year to revive EU economic ties, but Brussels will likely pushback strongly due to its view of China as a strategic rival and its ties to Russia, policy and trade advisors told MNI.
POLICY: China has extended import tariff exemptions on certain U.S. commodities, imposed by Beijing to counter Washington's Section 301 measures, the Customs Tariff Commission of the State Council said.
POLICY: President-elect Donald Trump's anti-globalisation policies will create more opportunities for cooperation between Beijing and Brussel's as both regions face pressure from U.S. protectionism and geopolitical challenges, according to a report released by the Bank of China's Research Institute.
LIQUIDITY: The People's Bank of China (PBOC) conducted CNY479 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY156.1 billion after offsetting the maturity of CNY635.1 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.6422% from 1.7414% on Thursday, Wind Information showed. The overnight repo average decreased to 1.3211% from 1.3242%.
YUAN: The currency strengthened to 7.2332 against the dollar from 7.2525 on Thursday. The PBOC set the dollar-yuan central parity rate lower at 7.1877, compared with 7.1894 set on Thursday. The fixing was estimated at 7.2409 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 2.0250%, down from Thursday's close of 2.0400%, according to chinamoney.com.cn.
STOCKS: The Shanghai Composite Index was up 0.93% to 3,326.46, while the CSI300 index rose 1.14% to 3,916.58. The Hang Seng Index edged up 0.29% at 19,423.61.
FROM THE PRESS: Monetary authorities have room for 40 basis points of interest rate cuts in future, said Sheng Songcheng, professor of economics and finance at the China Europe International Business School, after analysing China’s historical monetary policy to CPI relationship. Sheng said officials needed monetary policy to remain supportive to restore low corporate investment confidence. Given recent PBOC forward guidance, Sheng anticipated authorities will cut the reserve requirement ratio by 0.25-0.5 percentage points this year. A RRR cut will be needed to support the issuance of treasury bonds and local bonds.
Authorities plan to reduce the ratio of total social logistics costs to GDP from 14.4% in 2023 to about 13.5% in 2027, according to Zhang Shixin, deputy secretary-general at the National Development and Reform Commission. Speaking at a press conference, Zhang said the government would deepen integration between logistics innovation and manufacturing, commerce and trade, and unblock domestic and international logistics networks. Wu Junyang, head of the Economic and Trade Department at the NDRC, said officials will support firms to enhance international logistics cooperation and co-build overseas storage facilities.
Shenzhen city said it will comprehensively improve the quality of listed companies with their total market value exceeding CNY15 trillion by 2027, Yicai.com reported citing the municipal government’s plan. The city also aims to promote the vitality of the merger and acquisition, and restructuring market, with the total number of M&A and restructuring projects exceeding 100 and total transaction value exceeding CNY30 billion, the newspaper said.