MNI China Daily Summary: Monday, August 24

EXCLUSIVE: China needs to overhaul its bankruptcy law to give lenders and borrowers a bigger say in restructuring debts, helping to extract more value from distressed assets and allowing unviable state-owned companies to be closed down, a former senior official at the predecessor body to the National Development and Reform Committee told MNI.

POLICY: China's growth in Q3 and Q4 is likely to be more dynamic with strong momentum as the post-pandemic recovery continues to improve, said Vice Premier Liu He. China will promote entrepreneurship, prevent moral hazards that encourage excessive risk-taking, and encourage companies to obtain competitive advantages, Liu said in a speech at the launch of the restructured ChiNext exchange, the so-called Chinese Nasdaq, which was published by China Securities Regulatory Commission.

POLICY: China will speed up approvals for more foreign firms participating in the domestic wealth management industry, a spokesman for the banking regulator said following the approval of a venture linking BlackRock Inc. and Temasek Holdings with China Construction Bank. The regulator also stressed Hong Kong's place as a world's financial centre and condemned unilateral U.S. sanctions on financial institutions, according to a statement dated Aug. 22 on the website of the China Banking and Insurance Regulatory Commission. Hong Kong's financial market and its linked exchange rate regime are operating smoothly and the CBIRC will continue to support Chinese-funded financial institutions operating in Hong Kong, the spokesperson said.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY100 billion via 7-day reverse repos and CNY60 billion via 14-day reverse repos with the rates unchanged. This resulted in a net injection of CNY110 billion given the maturity of CNY50 billion of reverse repos, according to Wind Information. The operations aim to keep the 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 2.2651% from Friday's close of 2.3231%, Wind Information showed. The overnight repo average rose to 2.3335% from 2.2521% on Friday.

YUAN: The currency strengthened to 6.9126 against the dollar from Friday's close of 6.9136. The PBOC set the dollar-yuan central parity rate higher at 6.9194, compared with Friday's 6.9107.

BONDS: The yield on 10-year China Government Bonds was last at 2.9975%, up from Friday's close of 2.9825% according to Wind Information.

STOCKS: The Shanghai Composite Index gained 0.15% to 3,385.64. The CSI300 index increased 0.78% to 4,755.85. The Hong Kong's Hang Seng Index slightly rallied 1.74% to 25,551.58.

FROM THE PRESS: The PBOC should further reform LPR policies to increase the reference value and boost the marketisation of deposit rates, Wang Jingwen, a researcher with China Minsheng Bank and an influential commentator, wrote in the Economic Information Daily. The central bank may enhance LPR curves by adding quotations for the periods between the current 1-year and 5-year, Wang wrote. The PBOC can emphasize the MLF's role as a future interest rate transmission tool by broadening its coverage to more small and medium sized banks and reducing credit stratification, Wang wrote.

China aims to achieve positive economic growth this year and help more than 100 million businesses while creating more than nine million jobs in urban areas, said Premier Li Keqiang during a visit to Chongqing city. The official Xinhua News Agency on Sunday reported comments from Li, who said that China would continue implementing policies to stabilise employment, finance, investment, and foreign trade while also managing market expectations and uncertainties around development.

China will step up the regulation of the real estate sector with new rules targeting the financing of developers, Economic Information Daily reports citing the Ministry of Housing and Urban-Rural Development and the PBOC. The moves mark the first time that regulators have focused on developers as China seeks to maintain the long-term stability of the housing market, the Daily said citing Yan Yuejin, a research director of Shanghai E-House Real Estate Research Institute.

China must place its emphasis on developing the real economy to make it more competitive, innovative and resilient to risks, the People's Daily said in an editorial interpreting remarks by Chairman Xi Jinping on his tour last week in Anhui province. China must push for the upgrading of its traditional enterprises, including manufacturing, through merging with new communications technology and orienting towards smart manufacturing and innovations in the industrial Internet, the Daily said.