MNI China Daily Summary: Thursday, September 24

POLICY: China's unreliable entity list does not target specific countries or companies and there is no pre-set list of firms, Gao Feng, a spokesman for the Ministry of Commerce said Thursday. "Which companies will be included in the list depends on their own behavior," Gao said at the regular weekly press briefing when asked about the Unreliable Entity List Regulation, published last Saturday, which vows to penalize companies that take discriminatory actions toward Chinese firms.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY120 billion via 14-day reverse repos with rates unchanged at 2.35% on Thursday, injecting net CNY10 billion as CNY110 billion reverse repos matured today, according to Wind Information. The operation aims to maintain stable liquidity at the end of the quarter, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 2.0481% from Wednesday's close of 2.0958%, Wind Information showed. The overnight repo average dropped to 1.3982% from the previous 1.8397%.

YUAN: The currency weakened to 6.8240 against the dollar from 6.7920 on Wednesday. The PBOC set the dollar-yuan central parity rate higher for a third day at 6.8028, compared with Wednesday's 6.7986.

BONDS: The yield on 10-year China Government Bond was last at 3.0775%, down from the close of 3.0850% on Wednesday, according to Wind Information.

STOCKS: The Shanghai Composite Index lost 1.72% to 3,223.18, while the CSI300 index decreased 1.92% to 4,563.07. Hang Seng Index lost 1.82% to 23,311.07. Analysts say mainland traders tend hold more cash as China will go into a 8-day national holiday from next Thursday.

FROM THE PRESS: Government special-purpose bonds quotas may increase by CNY3 trillion to 3.5 trillion in 2021, lower than the increase of CNY3.75 trillion this year as the economy recovered and the policy returns to normal, according to the 21st Business Herald citing Yang Xiaoduo, a senior analyst with Bridata. The Herald also quoted Ma Jun, and an anonymous chief-income analyst, who said the quotas may be lower than in 2020 as the government reined in the easing policies. The comprehensive fiscal resource of the government is expected to be CNY27.7 billion at the end of this year and the debt ratio would be 94%, approaching the red line of 100%, the Herald reported citing data from the Finance Ministry.

China should focus on expanding consumption to further the economic recovery as a potential boom in real estate prices and credit loans will cause debt risks and suppress consumption among young people and the lower-middle class, Peng Wensheng, the chief economist from CICC wrote in the commentary posted on the People's Daily on Thursday. China should prevent housing speculation and the old development model of using real estate and investment to drive up demand, wrote Peng. Future monetary policies should play a bigger role in income distribution and providing transfer payments to the poor, Peng wrote.

Beijing will allow more strategic investments from foreign investors in public companies and encourage public companies to perfect their systems for asset restructuring, acquisitions, and split listings, Premier Li Keqiang said at the weekly executive meeting of China's State Council. Public companies should also increase the quality of disclosures, said Li. China will strengthen the supervision and punishment of behaviors such as market manipulation and insider trading, the statement from the meeting said.