MNI China Daily Summary: Thursday, Feb 6
EXCLUSIVE: Beijing’s measured response to the 10% U.S. tariff on all Chinese goods signals its willingness to discuss a deal with Washington which would see the removal of recently-imposed trade levies in exchange for importing more American goods, policy advisors told MNI.
POLICY: China is willing to resolve trade disputes through consultation and dialogue, according to He Yadong, spokesperson for the Ministry of Commerce, when responding to reporters' questions on recent U.S. tariffs.
LIQUIDITY: The People's Bank of China (PBOC) conducted CNY275.5 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY204.5 billion after offsetting the maturity of CNY480 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.8115% from 1.8713% on Wednesday, Wind Information showed. The overnight repo average increased to 1.8021% from the previous 1.7976%.
YUAN: The currency weakened to 7.2899 against the dollar, from 7.2724 at Wednesday's close. The PBOC set the dollar-yuan central parity rate lower at 7.1691, compared with 7.1693 set on Wednesday. The fixing was estimated at 7.2663 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 1.5825%, down from Wednesday's close of 1.5950%, according to Wind Information.
STOCKS: The Shanghai Composite Index gained 1.27% to 3,270.66, while the CSI300 index edged up 1.26% to 3,842.83. The Hang Seng Index was down 1.43% to 20,891.62.
FROM THE PRESS: China's economic recovery needs further policy support after January PMI data weakened from the end of last year, according to Wen Bin, chief economist at Minsheng Bank. Facing external uncertainties, action was needed to stabilise domestic demand as soon as possible, Wen added. Wang Zhe, senior economist at Caixin Group, said residents' willingness to consume must improve, highlighting the birth rate in 2024 remained low. The Caixin Service Industry PMI for January reached 51.0, down 1.2 percentage points from December, while the Caixin Manufacturing PMI fell 0.4 percentage points to 50.1, the lowest in nearly four months.
China saw 1.9 billion express parcels collected and delivered during the Spring Festival, up 31% from last year, Yicai reported, citing data from the State Post Bureau. UnionPay and ChinaNetPay's processing and payment activity increased 24% and 15% y/y during the festival, 21st Century Business Herald reported, citing data from the People's Bank of China.
China must intensify counter-cyclical adjustments and balance the relationship between foreign and domestic factors, China's Premier Li Qiang said at a meeting held to discuss drafting this year’s State Council Work Report. Li called on authorities to strengthen domestic circulation and promote scientific and technological innovation and industrial upgrading.