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MNI China Daily Summary: Friday, October 21
EXCLUSIVE: China's key reference lending rate for loans of over five years is expected to be cut to help lower mortgage rates as the government steps up efforts to support the ailing property market.
EXCLUSIVE: President Xi Jinping’s call for greater technology self-reliance will require policy and financial support to accelerate the domestic innovation needed to blunt the impact of new restrictions on U.S tech exports that threaten to derail China’s ambitions to move into advanced manufacturing, advisors and analysts said.
POLICY: Asia-Pacific Economic Cooperation members should deepen economic connections and insist on “real” multilateralism as economies across the region confront a slowdown in growth, said China's Minister of Finance Liu Kun at an APEC meeting on Thursday.
POLICY: China should diversify the use of its USD3 trillion-plus of foreign exchange reserves to serve the country’s global strategy and hedge external shocks, said the state-owned Economic Daily in a commentary piece.
POLICY: China's current pork reserves can maintain price stability, the National Development and Reform Commission said via its social media account. "The current central and local pork reserves are generally sufficient, there is a solid foundation to deal with abnormal fluctuations in the price of live pigs and pork," the NDRC said.
LIQUIDITY: The People's Bank of China (PBOC) injected CNY2 billion via 7-day reverse repos with the rate unchanged at 2.0%. This keeps liquidity unchanged after offsetting the maturity of CNY2 billion repos today, according to Wind Information. The operation aims to keep 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 1.6726% from 1.5186% on Thursday, Wind Information showed. The overnight repo average rose to 1.2376% from the previous 1.1575%.
YUAN: The currency weakened to 7.2494 against the dollar from 7.2377 on Thursday. The PBOC set the dollar-yuan central parity rate lower at 7.1186, compared with 7.1188 set on Thursday.
BONDS: The yield on 10-year China Government Bond was last at 2.7275%, up from Thursday's close of 2.7150%, according to Wind Information.
STOCKS: The Shanghai Composite Index edged up 0.13% to 3,038.93 while the CSI300 index fell 0.32% to 3,742.89. Hang Seng Index lost 0.42% to 16,211.12.
FROM THE PRESS: There is no reason for the yuan to depreciate over the long-term as it will be supported by the stable growth of the Chinese economy, the Securities Daily reported citing analysts after the offshore yuan breached the 7.27 mark against the U.S. dollar this week. As global risk aversion has pushed the U.S. dollar higher, the offshore yuan has fallen through support levels and the central parity rate of the yuan has also been lowered in a controlled manner in recent days, the newspaper said citing analysts. The People's Bank of China has a basket of policy tools to stabilise the yuan, the newspaper added.
The PBOC will implement prudent monetary policy and strengthen cross- and counter-cyclical adjustments, the PBOC-run newspaper Financial News reported citing PBOC Deputy Governor Pan Gongsheng. Pan also said the PBOC will create a favorable financial environment for promoting economic growth, expanding employment, stabilizing prices, and maintaining the balance of payments. It will give more prominence to the prevention and control of financial risks, and improve the early warning and disposal of financial risks, Pan was cited as saying.
An update on the PBOC website showed Xuan Changneng had been appointed as a new deputy governor on Thursday, Caixin reported. Xuan, whose most recent role was deputy head of the State Administration of Foreign Exchange, is one of the first overseas returnee officials in the financial regulatory department. Xuan moved to the U.S. to study in 1992 and obtained a master's degree in economics and a doctorate in finance from the University of Texas at Austin. He worked on Wall Street for two years before returning to China in 2000, Caixin said. He once worked for the China Securities Regulatory Commission, China Construction Bank, and as head of the PBOC’s Financial Stability Bureau from 2009 to 2016, he had promoted major reforms relating to deposit insurance system and policy banks, Caixin said.
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