MNI China Daily Summary: Monday, March 21

EXCLUSIVE: China’s pivot back to more growth-friendly expansionary policies after last year’s moves to tighten controls over the property market and big tech platforms may prove unsustainable in the longer term due to growing debts and monetary tightening by the Federal Reserve, a prominent policy advisor told MNI in an interview.

LPR: China's central bank on Monday left its benchmark rates for loans unchanged, according to a statement on the People's Bank of China website. The Loan Prime Rate, guiding companies' cost of borrowing, remains at 3.70% for the one-year maturity and 4.60% for five years.

LIQUIDITY: The PBOC injected CNY30 billion via 7-day reverse repos with the rates unchanged at 2.10%. The operation has led to a net injection of CNY20 billion after offsetting the maturity of CNY10 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) rose to 2.0949% from 2.0616% on Friday, Wind Information showed. The overnight repo average increased to 1.9964% from the previous 1.9870%.

YUAN: The currency strengthened to 6.3588 against the dollar from 6.3641 on Friday. The PBOC set the dollar-yuan central parity rate higher at 6.3677, compared with 6.3425 set on Friday.

BONDS: The yield on 10-year China Government Bond was last at 2.8750%, up from Friday's close of 2.8650%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.08% to 3,253.69 while the CSI300 index edged down 0.17% to 4,258.75. Hang Seng Index lost 0.89% to 21,221.34.

FROM THE PRESS: The PBOC is unlikely to cut the reverse repo rates this month since it left the rate on medium-term lending facility unchanged last week, a sign it intends to "hold steady" in the near term and sees current liquidity supply and demand stable, the Securities Daily said citing analyst. Following top policymakers’ call last Wednesday for boosting market confidence, the PBOC increased injections on Thursday and Friday, pushing down the benchmark DR007, the newspaper said. The increased injections also served to meet higher demand in the second half due to more tax payments and China Government Bond issuances, the newspaper said.

China’s monetary policies must be proactive, act timely and stay “ahead of the market curve” to guide expectations, state media Xinhua said commenting on the March 16 meeting of the financial stability and development committee. On real estate, China must be prepared to support a new model for development including policies that support guaranteed housing, Xinhua said. Regulations on Chinese companies seeking overseas listings will be optimized to present more investment opportunities to global investors, Xinhua said.

China won’t accept any external pressure to change its position on the Ukraine issue, the Global Times citing Foreign Minister Wang Yi, who commented on Saturday following the Xi-Biden call on Friday. China is keeping neutral on the current conflict and won’t be pressured to take sides, the state-owned newspaper said. There is no evidence that China is considering military assistance to Russia, it said dismissing a western media report. China will retaliate if Washington imposes sanctions, it said.