MNI China Daily Summary: Friday, January 22

POLICY: Foreign investors are likely to further boost purchases of yuan assets, particularly low-risk sovereign and bank bonds, which have certain safe haven attributes, the State Administration of Foreign Exchange said. "Foreign capital is still at the position-building stage in terms of allocating to yuan bonds and cross-border inflow will be relatively large," spokeswoman Wang Chunying told reporters today.

POLICY: Chinese banks have written-off CNY3.05 in non-performing loans in 2020, up from CNY2.3 trillion in 2019, according to a Vice Chairman of China Banking and Insurance Regulatory Commission, Liang Tao. The overall non-performing loan ratio was 1.92%, down 6 bps from the beginning of 2020, Liang added.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY2 billion via 7-day reverse repos with the rate unchanged today, leaving liquidity unchanged after the maturity of CNY2 billion reverse repos today, according to Wind Information. The operation aims to maintain the liquidity in the banking system at a reasonable and ample level, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 2.3504% from the 2.4017% on Thursday, Wind Information showed. The overnight repo average fell to 2.4567% from the previous 2.5913%.

YUAN: The currency slightly weakened to 6.4777 against the dollar from 6.4643 on Thursday. The PBOC set the dollar-yuan central parity rate lower at 6.4617 today. This compares with the 6.4696 set on Thursday.

BONDS: The yield on 10-year China Government Bond was last at 3.1700%, down from Thursday's close of 3.1800%, according to Wind Information.

STOCKS: The Shanghai Composite Index lost 0.40% to 3,606.75 while the CSI300 index edged up 0.09% to 5,569.78. Hang Seng Index tumbled 1.60% to 29,447.85.

FROM THE PRESS: The Chinese government will introduce a new round of measures to support the manufacturing industry and strengthen digital information, biomedicine, new materials and intelligent equipment, the Economic Information Daily reported. Local governments with specialist expertise in manufacturing will further expand funding supports to build innovation platforms to boost advanced manufacturing, the newspaper said. The government may stimulate companies' innovative vitality through favorable policies to help with research and development, government procurement, venture capital, tax incentives and patent declaration, the newspaper said.

China will carry out inspections of illegal charges against businesses among industry associations and prevent unauthorized fees and increases, the State Council said on Wednesday in a statement following an executive meeting. The government urges canceling maturing fees levied on enterprises and the reduction of charging standards, said the cabinet. Authorities should rapidly reform penalties for price violations against businesses to allow a freer environment, the government statement said.

The possibility of US-China cooperation in fighting COVID-19, resolving climate issues and promoting growth should help President Biden's vision for the new administration, the Global Times said in an editorial. The Biden administration should consider restarting a cooperation with China and reverse previous hardline policies, said the newspaper. The two countries will progress together if they stop fighting and focus on resolving their own domestic issues, the Times editorial said.