MNI China Daily Summary: Thursday, May 30

POLICY: The People’s Bank of China will further support the growth of offshore yuan markets and improve cross-border financial infrastructure while making efforts to promote the currency's internationalisation, said Tao Ling, deputy-governor at the central bank, in an interview with Financial News.

POLICY: China will begin implementing export controls on certain aerospace and shipbuilding items, according to a Ministry of Commerce notice.

LIQUIDITY: The PBOC conducted CNY260 billion via 7-day reverse repo, with the rates unchanged at 1.80%. The operation has led to a net injection of CNY258 billion after offsetting the CNY2 billion maturity today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.9177% from 1.9150% on Wednesday, Wind Information showed. The overnight repo average decreased to 1.7318% from the previous 1.8450%.

YUAN: The currency strengthened to 7.2455 against the dollar, from 7.2487 at Wednesday's close. The PBOC set the dollar-yuan central parity rate higher at 7.1111, compared with 7.1106 set on Wednesday.

BONDS: The yield on 10-year China Government Bonds was last at 2.3250%, up from Wednesday's close of 2.3200%, according to Wind Information.

STOCKS: The Shanghai Composite Index fell 0.62% to 3,091.68, while the CSI300 index was decreased 0.53% to 3,594.31. The Hang Seng Index declined 1.34% to 18,230.19.

FROM THE PRESS: The People’s Bank of China will likely continue to increase reverse repo operations to ensure stable liquidity and funding across months, Shanghai Securities News reported citing analysts. Analysts also have rising expectation for cuts to the reserve requirement ratio or interest rate given the recent significant issuance of local government bonds, the newspaper said. Europe may cut rates ahead of the U.S. in early June, which will help ease the depreciation pressure of the yuan and leave room for PBOC easing, while weak demand and banks’ high liability costs also require an RRR cut, the newspaper said citing Huaxi Securities.

China will gradually lift restrictions on the purchase of new energy vehicles in various regions, aiming to reduce the carbon dioxide emission intensity in the transportation sector by 5% by end-2025 compared with 2020, according to a carbon reduction plan issued by the State Council Wednesday. The plan aims to reduce energy consumption and carbon dioxide emissions per unit of GDP by about 2.5% and 3.9% in 2024. (Source: Yicai.com)

Authorities' recent efforts to strengthen ESG reporting will help domestic firms expand globally, according to Ma Jun, director at the China Society for Finance. The Ministry of Finance's intention to establish unified nationwide ESG standards by 2030 will create impetus for companies to strengthen carbon neutrality, improve ESG performance, and expand green finance. The government should next issue a detailed implementation roadmap, Ma added. (Source: 21st Century Business Herald)