MNI China Daily Summary: Monday, March 13

EXCLUSIVE: A senior advisor has called on policymakers to establish a state-backed fund of up to CNY100 billion to support the troubled property sector and provide better housing to people living in cities, while suggesting the central bank should cut rates to boost demand as inflation remains low.

POLICY: Achieving the government's 5% GDP growth this year "will not be easy" as the external environment remains unpredictable and stabilising the economy is challenging, said China's new premier, Li Qiang, at a press conference in Beijing.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY41 billion of operations via 7-day reverse repos, with the rates unchanged at 2.00%. The operation led to a net injection of CNY34 billion after offsetting the maturity of CNY7 billion reverse repos today, according to Wind Information. The operation aims to keep banking system liquidity reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) dropped to 1.9679% from 2.0253% on Friday, Wind Information showed. The overnight repo average fell to 1.6131% from the previous 1.8142%.

YUAN: The currency strengthened to 6.9005 against the dollar from 6.9653 on Friday. The PBOC set the dollar-yuan central parity rate lower at 6.9375, compared with 6.9655 set on Friday.

BONDS: The yield on 10-year China Government Bond was last at 2.8900%, up from Friday's close of 2.8850%, according to Wind Information.

STOCKS: The Shanghai Composite Index increased 1.20% to 3,268.70, while the CSI300 index was up 1.05% to 4,008.69. The Hang Seng Index edged up 1.95% to 19,695.97.

FROM THE PRESS: China must grow at a reasonable level that is conducive to high quality growth, while ensuring the rate is fast enough to support the expansion of employment and improvements to people’s livelihoods, according to Zhao Chenxin, deputy director of the National Development and Reform Commission (NDRC). Speaking at the National People's Congress, Zhao said China’s sound economic fundamentals had not changed, noting 27 of 31 provinces had set GDP growth targets higher than 5% as evidence of a strong recovery this year. He said the NDRC would focus on expanding domestic demand with deepening supply-side structural reforms, as well as supporting consumption. (Source Yicai.com)

The re-election of Yi Gang as governor of the People's Bank of China will help maintain policy stability and ensure financial support for the real economy will remain strong, according to Yicai.com. The paper said Yi is a determined reformer, who bases decisions on data-driven analysis. The reappointment of Yi, along with Finance Minister Liu Kun, signals a continuation of China’s opening up policy and market based reforms. Analysts said Yi and Liu's record in maintaining stability, managing financial risks, and navigating complex external environments make them well suited for the period ahead.

China’s growth target of around 5% this year is achievable given the longer term trend of development and the high frequency data since the start of this year, according to Kang Yi, director of the National Bureau of Statistics (NBS). Speaking on the sidelines of the National People’s Congress, Kang said he was confident in the overall improvement of economic activity so far this year. He cited growth in rail freight volume, power generation and loan expansion as evidence the economic rebound was on track, saying he was “really confident in the future”. (Source Yicai.com)