MNI China Daily Summary: Thursday, May 25

POLICY: China’s car exports will remain a significant contributor to export growth in 2023, after the country passed Germany to lag only Japan for foreign auto sales by volume in 2022, fuelled by demand for cheap electric vehicles and as domestic firms shift units abroad amidst a fierce price war at home.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY7 billion via 7-day reverse repos, with the rates unchanged at 2.00%. The operation has led to a net injection of CNY5 billion after offsetting the maturity of CNY2 billion reverse repo today, according to Wind Information. The operation aims to keep banking system liquidity reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.9235% from 1.7497%, Wind Information showed. The overnight repo average increased to 1.5546% from the previous 1.2875%.

YUAN: The currency weakened to 7.0686 against the dollar from 7.0418 on Wednesday. The PBOC set the dollar-yuan central parity rate lower at 7.0529, compared with 7.0560 set on Wednesday.

BONDS: The yield on 10-year China Government Bonds was last at 2.7550%, down from Wednesday's close of 2.7560%, according to Wind Information.

STOCKS: The Shanghai Composite Index closed down 0.11% at 3,201.26, while the CSI300 index decreased 0.22% to 3,850.50. The Hang Seng Index was down 1.93% to 18,746.92.

FROM THE PRESS: The People’s Bank Of China has released 27 measures to increase support for the science and technology sector. The central bank aims to create a financial system capable of developing a world class innovation sector with global influence. Policymakers will promote high-quality innovative SMEs to list on the stock exchange and support the sector to make use of international and domestic markets. Under the plan, banks are encouraged to increase credit and R&D loans to the sector. (Source: Yicai)

Beijing will adhere to the basic principle of opening up and work with the international community jointly to expand trade, according to Vice Premier He Lifeng. Speaking at a recent global trade summit He said China’s economic development stabilised the world economy after the pandemic through mutually beneficial economic cooperation with its partners. Beijing will support the construction of an open world economy and hopes international leaders will work together to accelerate trade, and investment, giving strong impetus to the world economic recovery. (Source: Yicai)

The Shanghai government will boost private sector confidence, according to Chen Jining, secretary of the Municipal Party Committee in Shanghai. The Government will encourage private firms to invest in innovative technology and participate in major national projects, and strategies. Authorities will create a market environment for fair competition with equal access and treatment, and work to remove hidden barriers. Chen said he will support private enterprises to go global, and build a cross-border industrial chain rooted in Shanghai. (Source: Yicai)