MNI China Daily Summary: Thursday, January 23
EXCLUSIVE: China has already factored in a further 10% hike in U.S. tariffs, so any countermeasures may depend on negotiations given that it could maintain its export volumes by boosting sales via regional trading blocs, a policy advisor to the Ministry of Commerce told MNI.
POLICY: US firms in China are less confident in the country's market growth and more pessimistic on U.S.-China relations this year, an American Chamber of Commerce in China survey showed on Thursday.
POLICY: China will steadily increase the proportion of A-share investment by medium-and long-term funds by setting an investment ratio and extending the assessment period, Wu Qing, chairman of the China Securities Regulatory Commission told reporters on Thursday.
POLICY: China is set to remain the world's second largest import market in 2025 for the 16th year running, following last year's 2.3% growth, according to He Yadong, Ministry of Commerce Spokesperson on Thursday.
LIQUIDITY: The PBOC conducted CNY480 billion via 14-day reverse repos, with the rate unchanged at 1.65%. The operation led to a net injection of CNY139.5 billion after offsetting the maturity of CNY340.5 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 2.1213% from 1.8721% on Wednesday, Wind Information showed. The overnight repo average decreased to 1.7989% from the previous 1.7999%.
YUAN: The currency weakened to 7.2874 against the dollar, from 7.2800 at Wednesday's close. The PBOC set the dollar-yuan central parity rate higher at 7.1708, compared with 7.1696 set on Wednesday. The fixing was estimated at 7.2845 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 1.6600%, up from Wednesday's close of 1.6457%, according to Wind Information.
STOCKS: The Shanghai Composite Index gained 0.51% to 3,230.16, while the CSI300 index edged up 0.18% to 3,803.74. The Hang Seng Index was down 0.40% to 19,700.56.
FROM THE PRESS: China must implement extraordinary countercyclical policies while deepening economic reform to achieve 5% GDP growth in 2025, according to a report by the Institute of Chinese Path To Modernisation at Nankai University. Countercyclical measures should focus on boosting consumer spending and improving investment efficiency, which require greater fiscal expenditure on social security, the report said. Authorities need to increase residents' proportion of national income and labour remuneration of primary distribution.
The People's Bank of China Shanghai Head Office will use multiple monetary policy tools to maintain reasonable and stable growth in total credit volume, Shanghai Securities News reported. The Shanghai branch will urge financial institutions to strengthen interest rate self-discipline, improve independent pricing capabilities and promote a steady decline in social financing costs, the newspaper said. The Office will optimise the structure of funding supply and focus on boosting consumption, expanding investment and stabilising foreign trade and investment, the newspaper added.
The PBOC recently conducted a CNY1.1 trillion 14-day reverse repo facility operation to provide stable liquidity before and after the holiday, and support funding needs for year-end bonuses, settling payments, and public consumption for goods and travel, according to Liang Si, a researcher at the Bank of China Research Institute. The operation, which led to a net injection of CNY198 billion after offsetting a maturity of CNY959.5 billion, signalled the central bank’s proactive stance in maintaining ample liquidity and stabilising market expectations.