MNI China Daily Summary: Thursday, April 18

EXCLUSIVE: China will likely issue a significant volume of ultra long-term special treasury bonds with tenors of 30 years or greater to support government investment over the next few years, while the central bank aims to strengthen credit support for related projects, a prominent policy advisor told MNI in an interview, adding that the boost to fiscal revenues from additional economic growth would pay for the extra debt.

POLICY: The People’s Bank of China (PBOC) will watch changes in the yuan closely and guard against any overshooting risks, implementing comprehensive measures to stabilise market sentiment and resolutely correct any pro-cyclical behaviors, said Zhu Hexin, vice governor of the PBOC and director of the State Administration of Foreign Exchange in a briefing.

POLICY: China’s rapid M2 expansion will slow as credit demand weakens in line with the economy's transformation, while the central bank will promote a moderate rise in prices and prevent excessively low interest rates from worsening fund idleness, said Zou Lan, director of the monetary policy department at the PBOC in a briefing.

POLICY: Authorities will provide support to ensure 70% of manufacturing firms are digitalised and open several smart factories by 2025, according to Shan Zhongde, vice minister of the Ministry of Industry and Information Technology.

POLICY: China’s cross border activity saw 141 million people enter and exit the country over Q1, an increase of 117.8% y/y, according to the National Immigration Administration. Foreign passport holders totalled 13.074 million persons, up 305.2% y/y.

LIQUIDITY: The PBOC conducted CNY2 billion via 7-day reverse repo, with the rates unchanged at 1.80%. The operation has led to no change to the liquidity after offsetting the maturity of CNY2 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.8555% from 1.8326% on Wednesday, Wind Information showed. The overnight repo average increased to 1.7746% from the previous 1.7318%.

YUAN: The currency weakened to 7.2390 against the dollar, from 7.2349 at Wednesday's close. The PBOC set the dollar-yuan central parity rate lower at 7.1020, compared with 7.1025 set on Wednesday. The fixing was estimated at 7.2299 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.2540%, down from Wednesday's close of 2.2600%, according to Wind Information.

STOCKS: The Shanghai Composite Index rose 0.09% to 3,074.22, while the CSI300 index was up 0.12% to 3,569.80. The Hang Seng Index increased 0.82% to 16,385.87

FROM THE PRESS: China’s domestic demand remains insufficient with weak social expectations, according to Liu Sushe, deputy director of the NDRC. Speaking at a press conference, Liu acknowledged the economic foundation was not yet solid and still faced challenges. Yuan Da, deputy secretary-general of the NDRC, said the economy achieved a good start in Q1, laying a solid foundation for achieving its full-year goals and China's recovery will continue to consolidate as government policy takes effect and it deploys new measures. (Source: Yicai)

China firmly opposes the Section 301 investigation launched by the U.S targeting China's maritime, logistics and shipbuilding industries, China's commerce ministry said late Wednesday on its website. The petition misinterprets normal trade and investment activities as damaging to U.S. national security and corporate interests, and blames China for U.S. industrial issues, lacking factual basis and running counter to common sense economics, the statement said. Beijing urged the U.S. to immediately cease its erroneous practices, noting it will follow the progress of the investigation closely and take all necessary measures to defend its rights and interests.

Premier Li Qiang has met with foreign buyers during this year’s Canton Fair calling the event a platform to expand China operations and promote free trade and maintain global supply chain stability. Looking ahead, China will expand high-level opening up, promote trade and investment liberalisation, stabilise global trade and the world economy. Beijing will expand market access, implement equal treatment for foreign enterprises, and safeguard the legitimate rights of overseas firms, the Premier noted. (Source: Yicai)