MNI China Daily Summary: Thursday, January 9
EXCLUSIVE: Beijing and Shanghai should rapidly remove restrictions introduced during the Covid-19 pandemic, such as reservations for attractions, to help boost tourism alongside the increased issuance of consumer coupons to promote consumption this year amid softening domestic demand, advisors told MNI.
POLICY: The People’s Bank of China (PBOC) will issue CNY60 billion of offshore yuan-denominated bills in Hong Kong to shore up the currency which is under pressure due to U.S tariff concerns. According to the Hong Kong Monetary Authority, the bills will be issue on Jan 17 with a maturity of six months. It is a record volume of offshore yuan bills issued by the PBOC so far.
DATA: China's Consumer Price Index rose 0.1% y/y in December, slowing for the fourth straight month from November's 0.2% and reaching a nine month low, in line with market expectation, data from the National Bureau of Statistics showed. PPI declined 2.3% y/y, narrowing from last month’s 2.5% fall and marking the 27th consecutive negative read, beating the market consensus of a 2.4% fall.
LIQUIDITY: The PBOC conducted CNY4.1 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY20.7 billion after offsetting the maturity of CNY24.8 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.6526% from 1.6049% previously, Wind Information showed. The overnight repo average increased to 1.5600% from the previous 1.5242%.
YUAN: The currency weakened to 7.3320 against the dollar from the previous 7.3317. The PBOC set the dollar-yuan central parity rate lower at 7.1886 on Thursday, compared with 7.1887 set on Wednesday. The fixing was estimated at 7.3373 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 1.6350%, up from the previous close of 1.6025%, according to Wind Information.
STOCKS: The Shanghai Composite Index fell 0.58% to 3,211.39, while the CSI300 index edged down 0.25% to 3,779.88. The Hang Seng Index was down 0.20% to 19,240.89.
FROM THE PRESS: China’s exports are expected to maintain 3% growth in 2025 if the U.S. only imposes about 10% additional tariffs on Chinese goods, 21st Century Business Herald reported citing Lian Ping, director of China Chief Economists Forum. The growth rate may slow to 1% should the U.S. impose tariffs of about 20% with a few developed countries following to take trade protection measures against China. Pessimistically, tariffs higher than 20% with more countries following suit would lead to a decline in Chinese exports.
China’s retail car sales reached 2.62 million vehicles in December, a rise of 11% y/y or 9% m/m, of which 1.38 million were electric vehicles, rising 46% y/y or 10% m/m, Yicai.com reported citing preliminary statistics by the China Automobile Dealers Association. The 2024 retail sales of passenger cars grew by 5% y/y to reach 22.88 million, driven by subsidies from national car renewal policy and trade-in schemes launched by local governments, the newspaper said.
Authorities will improve the green finance standard system and enrich green financial products and services, according to an official statement following a meeting held by the People's Bank of China and the Ministry of Ecology and Environment. It is necessary to accelerate the formulation of a unified support catalogue and clarify the key directions of green finance, the PBOC said.