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POLICY: China will strive to achieve the “best result” for GDP growth, focusing on stabilizing employment and prices to keep the economy operating within a reasonable range, although still observing a zero-Covid strategy, state media Xinhua News Agency reported following the Politburo meeting on Thursday.
LIQUIDITY: The People's Bank of China (PBOC) injected CNY2 billion via 7-day reverse repos with the rate unchanged at 2.10%. The operation has led to a net drain of CNY1 billion after offsetting the maturity of CNY3 billion repos today, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.5283% from 1.5498% on Wednesday, Wind Information showed. The overnight repo average increased to 1.0106% from the previous 1.0029%.
YUAN: The currency strengthened to 6.7450 against the dollar from 6.7569 on Wednesday. The PBOC set the dollar-yuan central parity rate lower at 6.7411 on Thursday, compared with 6.7731 set on Wednesday.
BONDS: The yield on 10-year China Government Bond was last at 2.7675%, flat from Wednesday's close, according to Wind Information.
STOCKS: The Shanghai Composite Index edged up 0.21% to 3,282.58, while the CSI300 index gained 0.02% to 4,225.67. Hang Seng Index lost 0.23% to 20,622.68.
FROM THE PRESS: China’s economic recovery is not a smooth path as consumption will continue to be under pressure with anti-pandemic measures becoming more stringent, and the real estate sector is still in a negative cycle with record-high developers’ default risks and low appetite for home purchases, wrote Wu Ge, chief economist of Changjiang Securities. Infrastructure investment, seen as the main growth driver this year, may play a weaker role without the help of a robust housing market, as the substantial reduction in land sales revenues has dampened the source of infrastructure funds, said Wu.
China should allow the yuan to make adequate adjustments in response to changes in a basket of currencies including the euro, the yen and the Korean won to maintain its export competitiveness, according to an article published by China Finance 40 Forum citing Sun Mingchun, chief economist of Haitong International. Currently, the yuan only weakens limitedly against the U.S. dollar when many non-U.S. currencies are depreciating sharply against the dollar, said Sun. This could pose challenges to Chinese exporters should the euro depreciate further amid possible recession in the euro zone in the next six months to a year, Sun was cited as saying.
Chinese President Xi Jinping has addressed provincial chiefs and central government ministers at a two-day study session in Beijing emphasizing the upcoming 20th National Congress of the Communist Party of China is a very important event at a critical moment, Xinhua News Agency reported late Wednesday. The Congress will focus on deploying strategic tasks and major measures for the next five years which will be the start of building a socialist modernized country, Xinhua cited Xi as saying. It is necessary to solve the problems of unbalanced and insufficient development, focus on making up for shortcomings and weaknesses and propose new ideas to solve the problem, Xinhua said citing Xi. MNI noted that the Congress expected to be held in autumn, will announce major leadership changes.
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