MNI China Daily Summary: Wednesday, April 21

POLICY: China's digital currency will not unsettle the global financial system as it is now mainly used in small amounts for domestic retail transactions, said Zhou Xiaochuan, former governor of the People's Bank of China (PBOC) at the Boao Forum for Asia on Wednesday, according to local media reports.

LIQUIDITY: The PBOC injected CNY10 billion via 7-day reverse repos with the rate unchanged at 2.2% on Wednesday. This leaves liquidity unchanged given the maturity of CNY10 billion reverse 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) decreased to 2.0800% from the close of 2.1610% on Tuesday, Wind Information showed. The overnight repo average rose to 1.8713% from the previous 1.8422%.

YUAN: The currency strengthened to 6.4951 against the dollar from 6.4953 on Tuesday. The PBOC set the dollar-yuan central parity rate lower for the seventh day at 6.5046, compared with the 6.5103 set on Tuesday.

BONDS: The yield on the 10-year China Government Bond was last at 3.1950%, up from Tuesday's close of 3.1925%, according to Wind Information.

STOCKS: The Shanghai Composite Index remained unchanged at 3,472.93, while the CSI300 index gained 0.30% to 5,098.74. Hang Seng Index fell 1.76% to 28,621.92.

FROM THE PRESS: The PBOC is likely to maintain the loan prime rate at its current level after leaving it unchanged yesterday for the 12th month, the China Securities Journal reported citing analysts. However, banks may slightly increase their lending rates by a few basis points on the LPR given that some market rates climbed this year, it said. The rates for private and small companies as well as loans to support technological innovation and green development will decrease, while rates for the real estate sector will rise, the newspaper said citing Wang Qing, chief analyst at Golden Credit Rating.

China should boost old age pensions and channel them into capital markets needing long-term funds, the Shanghai Securities News reported citing PBOC Deputy Governor Li Bo. Chinese financial markets lack long-term capital, particularly owners' equity, while its economy is too dependent on loans and its industries lack technology investments, Li said at the Boao forum. The pension contribution in OECD countries accounted for 126% of GDP in 2018 while in China it was only 10%, Li said.

Anti-China forces cannot stop China's steady growth as foreign investors are unable to resist the appeal of the Chinese market, particularly given China's strong position in leading the global economic recovery, the Global Times said commenting on a speech by President Xi Jinping's appealing to foreign businesses at the Boao Forum. Foreign investment into China has not and will not be held hostage by forces instigating anti-China sentiment, and businesses know that only pragmatic cooperation will yield mutual benefits, the newspaper said.