MNI China Daily Summary: Thursday, July 4

POLICY: China sees a four month window for Brussel’s and Beijing to “meet each other halfway” over the EV trade dispute before a final decision will be made, He Yadong, spokesperson for the Ministry of Commerce said. Speaking to reporters, He said multiple rounds of technical consultations have already taken place, and hoped consultations could be advanced as soon as possible based on facts and rules.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY2 billion via 7-day reverse repo, with the rates unchanged at 1.80%. The operation has led to a net drain of CNY98 after offsetting the CNY100 billion maturity today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.8045% from 1.7894% on Wednesday, Wind Information showed. The overnight repo average increased to 1.7181% from the previous 1.6920%.

YUAN: The currency strengthened to 7.2698 against the dollar, from 7.2734 at Wednesday's close. The PBOC set the dollar-yuan central parity rate lower at 7.1305, compared with 7.1312 set on Wednesday. The fixing was estimated at 7.2655 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.2450%, up from Wednesday's close of 2.2380%, according to Wind Information.

STOCKS: The Shanghai Composite Index fell 0.83% to 2,957.57, while the CSI300 index edged down 0.51% to 3,445.81. The Hang Seng Index was up 0.28% to 18,028.28.

FROM THE PRESS: The PBOC will likely maintain intensity for supporting the Yuan to ensure limited depreciation of the currency which faces pressure in the near term, said analysts from CITIC Securities. Asian currencies have been further suppressed by election uncertainty in major countries which has increased demand for safe havens and strengthened the U.S. dollar index. Meanwhile, China’s economic fundamentals have not improved significantly, with housing stimulus not yet taking effect and risks from Sino-EU trade friction, said analysts from Donghai Futures. (Source: 21st Century Business Herald)

China should promote the integration of AI with the real economy, given large language models are now disrupting R&D and production methods, Chinese Premier Li Qiang has said on a tour of Jiangsu. Governments at all levels should increase policy support for SMEs to grow into unicorns, and direct manufacturing towards high-end, intelligent and green development, Li added. (Source: Yicai)

Authorities are implementing new debt financing tools, including customized green bonds, designed to support the large-scale equipment renewal and consumer goods trade-in projects across China, Securities Daily has reported. Zhang Xinyuan, head of research at Co-Found Think Tank said the new tools can reduce financing costs, help enterprises update equipment, and provide more investment opportunities. China Construction Bank recently participated in underwriting four medium-term notes with a total issuance of CNY5.6 billion, which will be partly used by China Southern Power Grid on power grid improvement projects, the paper said.