MNI China Daily Summary: Wednesday, September 9

POLICY: China must improve the distribution of wealth to its population through measures such as increasing access to public services and deploying more fiscal stimulus to keep annual growth to around 5.5-6% over the next five years, Cai Fang, a vice president of the Chinese Academy of Social Sciences, said in a commentary.

DATA: China's August inflation decelerated to 2.4% y/y from 2.7% in July, slowing down after rebounding for two months, with the fall due to the high base for the same period last year. Analysts had expected 2.3% y/y. PPI was -2.0% y/y, narrowing the 2.4% fall in July. The figure was in line with the forecast.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY120 billion via 7-day reverse repos with the rate unchanged. This resulted in a net injection of CNY100 billion given the maturity of CNY20 billion of reverse repos, according to Wind Information. The operation aims to keep 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 2.1607% from Tuesday's close of 2.2048%, Wind Information showed. The overnight repo average fell to 1.5996% from the previous 2.0257%.

YUAN: The currency weakened to 6.8460 against the dollar from 6.8316 on Tuesday. The PBOC set the dollar-yuan central parity rate higher at 6.8423, compared with Tuesday's 6.8364.

BONDS: The yield on 10-year China Government Bond was last at 3.0800%, down from the close of 3.1150% on Monday, according to Wind Information.

STOCKS: The Shanghai Composite Index lost 1.86% to 3,254.63, while the CSI300 index tumbled 2.34% to 4,584.59. Hang Seng Index lost 0.63% to 24,468.93.

FROM THE PRESS: U.S. politicians should recognize that politics ultimately serves economic developments and that China and the U.S. could provide each other with favourable development opportunities when they choose to cooperate, the People's Daily said in an editorial. The U.S. should stop obsessing over ideological differences and the conflicts brought by globalisation and free trade, and instead recognize that only cooperation and mutual benefits would help future developments, the official newspaper said.

China should consider widening the use of local government special bonds to boost high-tech developments such as big data, the Internet of Things and smart cities, the Securities Times said in a front-page commentary. The proceeds from the record issuance of special bonds this year have not been matched with a sufficient number of profitable projects, and some local governments are presenting less profitable projects that may incur default risks, the newspaper said.

Chinese banking regulators are relaxing lending standards for private and small companies, allowing more SMEs effected by the epidemic to delay repayments, the 21st Century Business Herald reported citing two unnamed sources from state-owned banks. Banks are required to increase credit loans and extensions for SMEs, including those which may carry higher risks, the newspaper said. SMEs with questionable loans can apply for deferred repayment if they hold effective guarantees and commit to retaining workers, the newspaper said.