MNI China Daily Summary: Monday, January 20
EXCLUSIVE: China will lower its reference lending rate further in 2025 as authorities aim to keep monetary policy accommodative to support Q4’s positive momentum, and despite the Loan Prime Rate holding steady on Monday.
POLICY: China's Loan Prime Rate remained unchanged according to a People's Bank of China statement, in line with expectation as the central bank held its easing pace on the increasing pressure of the yuan.
POLICY: China and the U.S. can strengthen dialogue and negotiation on economic and trade issues, as the two countries have significant common interests and room for cooperation despite friction, Xinhua News Agency reported citing Chinese Vice President Han Zheng.
POLICY: China’s steel industry will strengthen efforts to control capacity and promote industry consolidation this year, said Yao Jin, president of the China Steel Association, noting the country will maintain its position as the world's largest steel producer and consumer in the foreseeable future.
LIQUIDITY: The PBOC conducted CNY123 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY98.2 billion after offsetting the maturity of CNY24.8 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 2.0995% from 2.1244%, Wind Information showed. The overnight repo average decreased to 1.8573% from 1.8592%.
YUAN: The currency strengthened to 7.3161 against the dollar from 7.3284 on Friday. The PBOC set the dollar-yuan central parity rate lower at 7.1886, compared with 7.1889 set on Friday. The fixing was estimated at 7.3361 by Bloomberg survey today.
STOCKS: The Shanghai Composite Index gained 0.08% to 3,3244.38 while the CSI300 index increased 0.45% to 3,829.68. The Hang Seng Index edged up 1.75% to 19,925.81.
FROM THE PRESS: Provincial economic targets of around 5% or above in 2025 demonstrate positive macro trends and intensified support policies, according to Zhang Yiqun, deputy director at the Chinese Society of Finance. Zhang said building a unified domestic market and enhancing confidence will be the primary task this year, with a focus on promoting consumption and investment. Mingming, chief economist at CITIC Securities, said China has shifted to high-quality development and needs to incorporate consumption alongside investment and exports as a growth driver.
China’s property market has shown recent signs of stabilisation, with home prices in first-tier cities trending upwards for three consecutive months and transaction volume remaining at a high level, Securities Daily reported, citing Zhang Bo, director at 58 Anjuke Real Estate Research Institute. Prices of new homes in tier-one cities rose by 0.2% m/m in December, compared to November’s 0.0%. Existing housing was 0.0%, up from the previous 0.1% decline. Major cities' real-estate markets are expected to boom after the Chinese New Year if authorities keep offering policy support, the newspaper said, citing Zhang.
U.S. president-elect Donald Trump signalled a willingness to cooperate with China, while Beijing should strive for the best and prepare for the worst, said an article by the state-run Xinhua News Agency via its social media account on WeChat, following the recent Xi-Trump call. The article noted that Trump’s promise to save TikTok was an important litmus test and the recent engagement was positive.