MNI China Daily Summary: Monday, March 27

POLICY: China can achieve its economic target of “around 5%” growth this year and monetary policy has room to maneuver as inflation remains mild, said Han Wenxiu, executive deputy director of the office of the Central Committee for Financial and Economic Affairs, at the China Development Forum 2023 on Saturday.

POLICY: China needs to relax restrictions on consumption of mid-and-high-end goods and services to boost domestic demand amid weak external demand, said Wang Yiming, a member of monetary policy committee of People’s Bank of China, at the China Development Forum 2023 on Saturday.

POLICY: China should alleviate the shortage of basic public services to unleash potential demand, particularly equalising services for nearly 300 million migrant workers, Liu Shijin, a member of monetary policy committee of People’s Bank of China, told MNI on the sidelines of the China Development Forum 2023 on Saturday.

POLICY: The most important task China faces is improving the social welfare system to address demand-side challenges as the population declines, Cai Fang, a member of monetary policy committee of People’s Bank of China, told MNI on the sideline of the China Development Forum 2023 on Saturday.

LIQUIDITY: The PBOC conducted CNY255 billion via 7-day reverse repos, with the rates unchanged at 2.00%. The operation led to a net injection of CNY225 billion after offsetting the maturity of CNY30 billion of reverse repos today, according to Wind Information. The Peoples' Bank of China cut the reserve requirement ratio by 25 bps on Mar 27 while conducting CNY255 billion via 7-day reverse repos, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.0561% from 1.6982%, Wind Information showed. The overnight repo average decreased to 1.0092% from the previous 1.2697%.

YUAN: The currency weakened to 6.8820 against the dollar from 6.8655 on Friday. The PBOC set the dollar-yuan central parity rate higher at 6.8714, compared with 6.8374 set on Friday.

BONDS: The yield on 10-year China Government Bonds was last at 2.8800%, down from Friday's close of 2.8875%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.44% to 3,251.40, while the CSI300 index fell 0.36% to 4,012.48. The Hang Seng Index was down 1.75% to 19,567.69.

FROM THE PRESS: China will intensify efforts to implement a strong fiscal policy and efficient taxation system this year to stabilise the economy, according to Liu Kun, China's Finance Minister. Speaking at the China Development Forum, Liu said the global economic situation was not optimistic, and China's economy faces challenges. Support for small and medium-sized enterprises, self-employed businesses, and disadvantaged industries will be a key focus this year, he said. (Source: 21st Century Herald).

Decoupling from China will push global inflation higher and risks sparking a widespread recession, according to Yi Xiaozhun, former vice minister of the Ministry of Commerce and former deputy director general of the WTO. Yi said global cooperation on climate change and public health had become more difficult as the trading system had become more fragmented due to the pandemic and rising geopolitics. Liu said no country can establish a fully domestic supply chain, with China and the U.S. being no exception. Multinational companies are inseparable from China and building a new value chain without Beijing would be very difficult. (Source: 21st Century Herald).

China should expand and implement a full real estate taxation system as soon as the economy returns to normal, according to ex-finance minister Lou Jiwei. In a recent article, Lou said real-estate tax is an important feature in the development of China’s financial system and evolution of local tax revenue. The complexity of property rights is the biggest difficulty to enact the required legislation, especially the differences in ownership rights and income between urban and rural dwellers.(Source: Yicai).