MNI China Daily Summary: Thursday, April 20

POLICY: China’s strong performance in exporting high value added products in Q1 can continue, as authorities pursue policies to stabilize exports, according to a China Ministry of Commerce (MOFCOM) spokesperson.

POLICY: China's consumer prices are likely rise in the second half of the year, as consumption picks up on the back of financial support, with little sign of deflation risk, said Zou Lan, head of the Monetary Policy Department of the People’s Bank of China on Thursday.

POLICY: The People’s Bank of China will stabilise credit supply after fast expansion in the first quarter, while maintaining liquidity at sufficiently ample levels to consolidate the momentum of economic recovery, PBOC's head of the statistics and analysis Ruan Jianhong told reporters in a briefing on Thursday.

POLICY: China's overall debt-to-GDP ratio is expected to rise in Q1 2023, as lenders accelerated loan supply and increased holdings of government debt in a bit to boost the economy, said Ruan Jianhong, head of the Statistics and Analysts Department of the People’s Bank of China on Thursday.

POLICY: The People’s Bank of China will ensure policy rates remain at appropriate levels, looking to prevent rate risk, taking lessons from the collapse of Silicon Valley Bank and last year's volatility across China’s wealth management market, said Zou Lan, head of the Monetary Policy Department of the PBOC .

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY34 billion via 7-day reverse repos, with the rates unchanged at 2.00%. The operation has led to a net injection of CNY25 billion after offsetting the maturity of CNY9 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) decreased to 2.1327% from 2.1340%, Wind Information showed. The overnight repo average increased to 2.2212% from the previous 2.1347%.

YUAN: The currency strengthened to 6.8796 against the dollar from 6.8966 on Wednesday. The PBOC set the dollar-yuan central parity rate higher at 6.8987, compared with 6.8731 set on Wednesday.

BONDS: The yield on 10-year China Government Bonds was last at 2.8525%, down from Wednesday's close of 2.8550%, according to Wind Information.

STOCKS: The Shanghai Composite Index closed down 0.09% at 3,367.03, while the CSI300 index decreased 0.28% to 4,113.02. The Hang Seng Index was up 0.14% to 20,396.97.

FROM THE PRESS: Authorities are urgently drafting policy documents aimed at restoring and expanding consumption, according to the National Development and Reform Commission (NDRC). Consumption has made a steady recovery so far this year, however the government believes more policy support is needed to build sustainable momentum. The spokesperson said the proposals under consideration will focus on expanding bulk and service consumption, as well as boosting rural household expenditure. The electric automobile industry will benefit, with the NDRC planning to increase charging stations and parking facilities, and promote models suitable for rural areas. (Source: 21st Century Herald).

China’s trading partners' efforts to de-dollarise and expand the use of renminbi will take time, according to local analysts interviewed by the Securities Daily. China can enhance the internationalisation of the RMB, as it has a strong foundation including the world’s largest trade volume, strong economic operation and a stable exchange rate. However the US established the dollar as the default trading currency ahead of other countries, meaning it will take time to unwind. Analysts noted that ASEAN, Belt and Road countries, Russia and Saudi Arabia have increased use of RMB for trade, showing evidence the world has begun de-dollarisation.

Shanghai’s economy made a strong start to Q1 but the foundation has not yet solidified, according to Shanghai Mayor Gong Zheng speaking at a recent meeting. Business and household indicators have shown steady improvement and market confidence has returned, but he urged local officials to maintain a “stronger sense of urgency” in promoting the city’s economy going forward. This year Shanghai will develop the "E-commerce Silk Road" and promote high-quality integration of the Yangtze River Delta. Support will be given to emerging industries and strengthening weak areas of the supply chain, he said. (Source: Yicai)