MNI China Daily Summary: Monday, September 21

Exclusive: China's export growth will remain strong in the short-to-medium term but increased competition from global manufacturers restarting their businesses and a rapid appreciation of the yuan will eventually exert brakes, policy advisors told MNI. Exports rose by 9.5% y/y in August in dollar terms, the most since March 2019 and jumping 2.3 percentage points from July. For the first eight months of the year they grew by 0.8% y/y, pushing China's trade surplus up 13.2% to USD289 billion.

POLICY: The People's Bank of China (PBOC) will promote the use of green finance and cooperate with global counterparts in the next five years to prevent systemic financial risks resulting from changes in the environment and climate, officials said on Saturday. The central bank will launch polices under China's 2021-2025 Plan, including optimizing green finance standards, strengthening lenders' green performance evaluation and disclosure and widening current pilot projects, Deputy Governor Chen Yulu said at a meeting of the China Green Finance Committee.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY100 billion via 7-day reverse repos and CNY40 billion via 14-day reverse repos on Monday, injecting net CNY60 billion due to the maturity of CNY80 billion reverse repos, according to Wind Information. The PBOC also deposited CNY80 billion in central treasury cash at commercial banks today. The rate for 7-day reverse repos and 14-day reverse repos remained unchanged at 2.2% and 2.35% accordingly.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.3262% from last Friday's close of 2.2794%, Wind Information showed. The overnight repo average rose to 2.2350% from the previous 2.2147%.

YUAN: The currency weakened to 6.7733 against the dollar from 6.7588 on last Friday. The PBOC set the dollar-yuan central parity rate higher at 6.7595, compared with last Friday's 6.7591.

BONDS: The yield on 10-year China Government Bond was last at 3.1000%, down from the close of 3.11125% on last Friday, according to Wind Information.

STOCKS: The Shanghai Composite Index lost 0.63% to 3316.94, while the CSI300 index decreased 0.96% to 4,691.43. Hang Seng Index dropped 2.06% to 23950.69.

FROM THE PRESS: The PBOC's net injections through MLFs in August and September showed that the central bank took note of the lack of long-term liquidity for commercial banks, the China Securities Journal reported citing Sun Binbin, the chief fixed income analyst with TF Securities. The PBOC used recent liquidity injections to counter the impact of government bond issuances and the maturity of previous injections, the newspaper said citing analysts.

The U.S. has underestimated the significance and sensitivity of the Taiwan issue for Sino-U.S. relations judging by recent actions including the visit of Under Secretary of State Keith Krach, the People's Daily said in an editorial. It has also underestimated China's determination to safeguard national sovereignty and territorial integrity, as demonstrated by military excercises in the Taiwan Strait beginning last week, the Daily said.

The Covid-19 pandemic is "certain" to make a comeback in China as the world grapples with "the second wave," and the country should be prepared for at least another year of combating the disease, The Paper reported citing Zhang Wenhong, an influential epidemiologist with Fudan University. Zhang noted that China last week dispatched inspectors to the provinces to check on prevention efforts, The Paper said.