POLICY: China's economy grew at a better-than-expected 3% pace in 2022, though it it fell short of the government's 5.5% target and marked one of the lowest growth rates in decades as pandemic control measures weighed heavily on activity, data released by the National Bureau of Statistics (NBS) on Tuesday showed.
POLICY: China's real estate sector will have less of a negative impact on the economy in 2023, according to Kang Yi, Commissioner of the NBS.
LIQUIDITY: The People's Bank of China (PBOC) conducted CNY205 billion of operations via 7-day reverse repos and CNY301 billion via 14-day reverse repos with the rates unchanged at 2.00% and 2.15%, respectively. The operation led to a net injection of CNY504 billion after offsetting the maturity of CNY2 billion reverse repos today, according to Wind Information. The operation aims to hedge the impact of tax paying and cash injection peak to keep banking system liquidity stable before Chinese New Year, the PBOC said on its website.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.3221% from the close of 2.1849% on Monday, Wind Information showed. The overnight repo average was up to 1.8566% from the previous 1.5821%.
YUAN: The currency weakened to 6.7652 against the U.S. dollar from the previous close of 6.7281. The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 6.7222, compared with 6.7135 set on Monday.
BONDS: The yield on the 10-year China Government Bond was last at 2.9200%, down from the close of 2.9490% on Monday, according to Wind Information.
STOCKS: The Shanghai Composite Index edged down 0.10% to 3,224.24, while the CSI300 index was down 0.02% to 4,137.24. Hong Kong's Hang Seng Index was down 0.78% to 21,577.64.
FROM THE PRESS: China should issue about CNY1.5 trillion of special treasury bonds to support the economic recovery after pandemic controls eased, reported Financial News, which is run by the People’s Bank of China. Citing advisors, it said there is policy room for the issuance as the government leverage ratio is not high, and the funds could be used to subside consumption via handing out consumption coupons and to help small businesses and key sectors. The economy will still face headwinds this year since household confidence is still soft, dragging on consumption and house buying, while geopolitical risk is lingering, industrial chains are moving abroad, and virus mutations may trigger new infection waves, advisors said.
The Chinese yuan is expected to rally and may jump to 6.3 against the dollar by the end of the year, China Business Network reported. Analysts attributed the recent rally of the yuan to improved market sentiment on signs of economic recovery supported by the reopening, a series of measures shoring up the property sector, capital inflows, increasing dollar sales at year-end, and a weaker dollar index. But a narrower trade surplus may restrain yuan appreciation in the second half of the year when the currency could see two-way volatility, analysts said.
Measures are needed to increase pork prices to a reasonable and stable level as soon as possible, as weak demand and increases in supply have seen prices fall from CNY26.01/kg on January 3 to CNY23.12/kg on January 13, the National Development and Reform Commission (NDRC) told hog producers during a recent meeting, according to China Securities News. The commission said it expects that with a further recovery in consumption, hog prices can gradually return to a reasonable range, and price fluctuations in 2023 will be smaller than in 2022.
