MNI China Daily Summary: Friday, February 19

LIQUIDITY: The People's Bank of China (PBOC) injected CNY20 billion via 7-day reverse repos with the rate unchanged on Friday. This resulted in a net drain of CNY80 billion given the maturity of CNY100 billion of reverse repos today, according to Wind Information. The operation aims to maintain reasonable and ample liquidity, as cash returns to the banking system after the Chinese New Year holiday, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.9953% from 2.2274% on Thursday, Wind Information showed. The overnight repo average decreased to 1.8155% from the previous 2.2982%.

YUAN: The currency strengthened to 6.4575 against the dollar from 6.4706 on Thursday. The PBOC set the dollar-yuan central parity rate higher for a second day at 6.4624 today. This compares with the 6.4536 set on Thursday.

BONDS: The yield on 10-year China Government Bond was last at 3.2925%, down from Thursday's 3.3200%, according to Wind Information.

STOCKS: The Shanghai Composite Index rose 0.57% to 3,696.17, while the CSI300 index edged up 0.18% to 5,778.84. Hang Seng Index increased 0.16% to 30,644.73.

FROM THE PRESS: The market should not overinterpret recent moves by the PBOC to drain liquidity from the market on the first post-holiday trading day this week, according to a commentary in Financial News, which is owned by the central bank. The commentary said the PBOC had signaled it intends to keep interest rates stable even as it unexpectedly drained CNY260 billion this week. The weighted average interest rate of DR007 remained stable at 2.23%, the newspaper added. The PBOC is focused on short-term benchmark rates while the amount of liquidity injected or drained in OMOs vary according to cash conditions, fiscal and market demand, the newspaper said.

Any attempt by U.S. President Joe Biden to align G7 countries against China would not succeed as the alliance lacks solid common ground and the member states were not likely to change their positions on economic and currency cooperation with China, the Global Times reported citing Chen Fengying, a research fellow at the China Institutes of Contemporary International Relations. The state tabloid reported the comments ahead of a G7 virtual meeting on Friday. China has voiced opposition to group politics based on ideological divides, and advocated that global affairs should be collectively managed by different nations, the newspaper said citing the Chinese foreign ministry.

Several Chinese provinces have set GDP targets of over 10% for 2021, while the majority have targeted over 6%, the state-run Economic Information Daily said in a front-page report. The targets were set in the regional parliamentary sessions for this year, the start of China's 14th 5-Year economic plan when regions are expected to compete and find new drivers for growth, the newspaper said. China's growth is expected to surge this year given the pandemic hindered normal economic expansion last year, the Daily said. Local authorities are also seeking to boost expansion in higher-value sectors including innovation and the digital economy.