MNI China Daily Summary: Thursday, March 28

EXCLUSIVE: Robust trade with emerging markets will support China’s imports and exports in 2024, with foreign trade expected to rise marginally over 2023's softer levels and despite western countries’ continued efforts to “de-risk” away from Chinese-made goods, a prominent trade advisor told MNI in an interview.

POLICY: China demand for steel has made a slow start to the year as the real estate market continues to decline and the intensity of infrastructure construction slows down, the China Iron and Steel Association said.

POLICY: Central Huijin Investment, Chinese sovereign funds, and insurance companies have continued to make significant allocations to exchange-traded funds (ETF) according to recently published annual reports, noted the Shanghai Securities Journal hosted by Xinhua News Agency.

POLICY: Foreign companies have an important role to play in developing new productive forces, Huang Hanquan, dean at the Academy of Macroeconomic Research, told reporters.

POLICY: China should pay attention to overcapacity when developing "new quality productive forces" by moderating its industrial policies to avoid over-guiding and over-stimulating, and maintain a good boundary between government and the market, said Huang Hanquan, dean of the Academy of Macroeconomic Research.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY250 billion via 7-day reverse repo, with the rates unchanged at 1.80%. The operation has led to a net injection of CNY248 billion after offsetting CNY2 billion maturity today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.9845% from 2.0147% on Wednesday, Wind Information showed. The overnight repo average decreased to 1.7186% from the previous 1.7599%.

YUAN: The currency weakened to 7.2277 against the dollar, from 7.2284 at Wednesday's close. The PBOC set the dollar-yuan central parity rate higher at 7.094, compared with 7.0946 set on Wednesday.

BONDS: The yield on 10-year China Government Bonds was last at 2.4025%, up from Wednesday's close of 2.4000%, according to Wind Information.

STOCKS: The Shanghai Composite Index rose 0.59% to 3,010.66, while the CSI300 index was up 0.52% to 3,520.96. The Hang Seng Index increased 0.91% to 16,541.42

FROM THE PRESS: China’s steel industry faces a turning point as real-estate and infrastructure sectors adjust and new infrastructure, energy and intelligent manufacturing emerge, according to Pan Fujie, director of the China Federation of Iron and Steel Logistics Committee. Looking forward, the steel industry should focus on globally competitive industries such as automobiles and photovoltaics. Industry analysts believe poor terminal demand after the holiday has not motivated steel mills to increase production and replenish raw material stocks, and producers are not optimistic about steel price trends later this year, Yicai added.

Beijing city has lifted the homebuying restriction which previously forbid purchase within three years of divorce, a rule introduced in 2021 to stop couples from faking their divorces to buy more homes, 21st Century Business Herald reported. The move came after the State Council executive meeting last week called for optimal housing policies, opening room for further relaxations on the purchase of large houses and suburb homes in the capital, said Chen Wenjing, market research director at China Index Academy. Beijing could also further ease homebuying restrictions for talents, families with multiple children and elderly, Chen added.

China should speed up the delisting of unqualified companies in the stock market, said Wu Xiaoqiu, dean of the China Capital Market Research Institute at the Boao Fourm. Wu noted authorities needed to strike a better balance with IPOs and delistings. Many companies concerned accountability have withdrawn their IPO application, which indicated they failed to meet the standards. It is also necessary to improve shareholding reduction rules and allow major shareholders to reduce their holdings only after they have created wealth for society, said Wu. (Source: China Economic Weekly)