MNI China Daily Summary: Tuesday, September 8

EXCLUSIVE: China's experimental digital currency could soon be in widespread retail use throughout the country, policy advisors told MNI, adding that the project's initial focus on replacing cash transactions means its impact on monetary policy will take longer to emerge.

REALITY CHECK: China's consumer inflation index looks set to edge lower in August, helped by the favorable base effects in comparison to the same month last year, industry leaders and analysts told MNI, although food prices remain at the same elevated levels seen in July and many other costs rose as the economy continues its recovery from the pandemic.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY170 billion via 7-day reverse repos with the rate unchanged. This resulted in a net injection of CNY100 billion given the maturity of CNY70 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) rose to 2.2048% from Monday's close of 2.1971%, Wind Information showed. The overnight repo average decreased to 2.0270% from the previous 2.0791%.

YUAN: The currency weakened to 6.8316 against the dollar from 6.8302 on Monday. The PBOC set the dollar-yuan central parity rate lower at 6.8364, compared with Monday's 6.8386.

BONDS: The yield on 10-year China Government Bond was last at 3.1200%, down from the close of 3.1425% on Monday, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.72% to 3,316.42, while the CSI300 index increased 0.54% to 4,694.39. Hang Seng Index slightly increased 0.14% to 24,624.34.

FROM THE PRESS: The U.S. should "stay sane" and not tell lies about China and provoke military conflicts as peace is the bottom line in Sino-U.S. relations, according to an editorial in the Global Times, the tabloid published by China's ruling party. U.S. politicians are not held accountable for making disparaging remarks about China as long as they take an anti-China stance, the newspaper said in its editorial on Monday night. While the U.S. is shouting "decoupling" with China, it must know that maintaining trade and cultural exchanges is in the interest of Americans, the Times said.

Chinese banks saw their credit card issuance volumes and loan balances plunge in H1 while non-performing rates for credit card loans surged after the pandemic reduced spending, according to the Securities Daily citing semi-annual reports from banks released in the past week. The rate of bad credit card debt for privately owned banks was worse than SOE banks, with private Shanghai Pudong Development Bank's NPL ratio rising 1.01 pp from end-2019 to 3.31% while that of Minsheng Bank was up 0.75 pp to 3.23%, the Daily said. The situation has improved from Q2 and the quality of credit card loans may be controllable in H2, according to the report.

China will continue to push for the opening up of its bond market to foreign capital, the internationalisation of the yuan and the convertibility of yuan accounts, reported the Economic Information Daily. The PBOC will continue to treat foreign companies equally as domestic firms on top of the negative list management system, the paper cited Yi Gang, the Governor of PBOC. China should continue to develop the yuan's pricing, settlement, trade, investment and reserve functions, while improving macro-prudential regulation to prevent external risks, the newspaper said citing Guo Shuqing, the head of the China Banking and Insurance Regulatory Commission.