MNI China Daily Summary: Wednesday, September 16

POLICY: China's investment momentum is expected to continue with more projects starting with additional funds available from the central budget, special local government bonds, and anti-epidemic special Treasury bonds, Meng Wei, spokeswoman of the National Development and Reform Commission, said Wednesday.

POLICY: The current global economic downturn will require a long recovery period as many uncertainties persist, and joint efforts are needed to contain the pandemic and promote growth, Chinese Premier Li Keqiang said on Tuesday. Still, Li said his government had been "timely, effective and accurate" in implementing its policies, setting China on a stable recovery and likely to achieve a positive growth and major annual targets this year. Li made the remark to global business people during the online World Economic Forum.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY120 billion via 7-day reverse repos with the rate unchanged. This offsets the maturity of CNY120 billion of reverse repos, leaving liquidity unchanged, 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) increased to 2.1482% from Tuesday's close of 2.0996%, Wind Information showed. The overnight repo average fell to 1.3952% from the previous 1.7017%.

YUAN: The currency strengthened to 6.7613 against the dollar from 6.7775 on Tuesday. The PBOC set the dollar-yuan central parity rate higher at 6.7825, compared with Tuesday's 6.8222, the first break through the 6.8 level since May 14, 2019.

BONDS: The yield on 10-year China Government Bond was last at 3.1225%, up from the close of 3.1050% on Monday, according to Wind Information.

STOCKS: The Shanghai Composite Index lost 0.36% to 3,283.92, while the CSI300 index fell 0.66% to 4,657.36. Hang Seng Index edged down 0.03% to 24,725.63.

FROM THE PRESS: The yuan is likely to move both ways rather than on a clear path of appreciation, the Shanghai Securities News reported citing Guan Tao, chief economist of BOCI Securities. The market remains divided after the currency surged past 6.8 against the dollar, the newspaper said. Some analysts, including Chief Economist Gao Shanwen of Essence Securities, have argued that the yuan has entered a strengthening phase supported by increasing Chinese exports and the depreciation of the dollar, the News said.

The PBOC may not cut banks' required reserve ratios across the board after it injected CNY60 billion through MLF with the rate unchanged at 2.95% in September, providing liquidity to banks and giving structured deposit funds time to settle, the Economic Information Daily reported citing Wang Qing, an analyst from Golden Credit Rating. With CNY1.4 trillion MLF expiring by the end of the year, the PBOC is expected to continue meeting liabilities with MLFs rather than RRR cuts while maintaining LPR in September, Wang Yifeng, an analyst from Everbright Securities, told the Daily.

China has urged the U.S. to respect the decision of a WTO panel on Sept. 15 which sided with China's claim against its Section 301 actions raising tariffs on Chinese products, according to a statement by China's Ministry of Commerce on Tuesday. The U.S. should also respect multilateral trade systems and promote global growth with China and other WTO members, the ministry said.