MNI China Daily Summary: Tuesday, January 21
POLICY: Copper prices have found support after President Donald Trump decided not to implement China tariffs immediately following his inauguration and alongside his signalled intention to visit Beijing during the first 100 days, easing analyst concerns over US-China trade tensions, Shanghai Metals Market (SMM) said in a note.
LIQUIDITY: The People's Bank of China (PBOC) conducted CNY256 billion via 14-day reverse repos, with the rate unchanged at 1.65%. The operation led to a net injection of CNY201 billion after offsetting the maturity of CNY55 billion today, according to Wind Information.
RATES: China's seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 2.0324% from 2.0995%, Wind Information showed. The overnight repo average fell to 1.7993% from 1.8573%.
YUAN: The currency strengthened to 7.2798 from 7.3161 at Monday's close. The PBOC set the dollar-yuan central parity rate lower at 7.1703, the lowest level since Nov 8, 2024, compared with 7.1886 set on Monday. The fixing was estimated at 7.2934 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 1.6175%, down from Monday's close of 1.6394%, according to chinamoney.com.cn.
STOCKS: The Shanghai Composite Index lost 0.05% to 3,242.62 while the CSI300 index edged up 0.08% to 3,832.61. The Hang Seng Index increased 0.91% to 20,106.55.
FROM THE PRESS: Fiscal policy should be more proactive with expenditure outlays as soon as possible, while a moderately loose monetary stance should maintain ample liquidity and ensure funds enter the real economy, Xinhua News Agency reported, citing Premier Li Qiang. Authorities will closely monitor changes in the domestic and international situation and adjust policy measures in a timely manner, while deepening reform and opening up, said Li. China needs to focus on breakthroughs in core and cutting-edge technologies, while also increasing residents' income and reducing household burden, Li added.
China’s electricity demand reached 9,852 billion kilowatt hours in 2024, up 6.8% y/y, and faster than 2023’s 6.7% y/y growth, according to data from the National Energy Administration. Primary, secondary and tertiary industries grew 6.3%, 5.1% and 9.9%, versus 2023 rates of 11.5%, 6.5%, and 12.2%. Urban and rural residents’ demand rose 10.6% y/y, faster than 2023’s 0.9% growth.
The yuan is likely to stabilise or even appreciate amid weakening upward momentum in the U.S. dollar index, stronger-than-expected China GDP data and authorities’ signalling on currency stability, Yicai.com reported, citing market observers. A downward turn in the dollar could occur if the pace and intensity of tariff hikes proves less than expected, the newspaper said, citing experts. The U.S. dollar index may have reached a periodic peak after reaching a high of 110, the newspaper said.