MNI China Daily Summary: Tuesday, January 9

EXCLUSIVE: China’s international trade will rebound in 2024 despite the strengthening yuan and Red Sea shipping disruptions, as the world economy stabilises, geo-political tensions cool, and Beijing diversifies its trading partnerships, a policy advisor told MNI.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY65 billion via 7-day reverse repo on Tuesday, with the rates unchanged at 1.80%. The reverse repo operation has led to a net drain of CNY157 billion reverse repos after offsetting CNY222 billion maturity today, according to Wind Information.

RATES: China's seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.7805% from 1.7918%, Wind Information showed. The overnight repo average decreased to 1.5787% from the previous 1.5877%.

YUAN: The currency strengthened to 7.1590 against the dollar from 7.1599 on Monday. The PBOC set the dollar-yuan central parity rate higher at 7.1010, compared with 7.1006 set on Monday. The fixing was estimated at 7.1490 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.5550%, up from 2.5750% at Monday's close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.20% to 2,893.25 while the CSI300 index rose 0.20% to 3,292.50. The Hang Seng Index was down 0.21% to 16,190.02.

FROM THE PRESS: The People's Bank of China will use open market operations, medium-term lending facilities and reserve requirements among other monetary policy tools to provide “strong” support for reasonable growth in credit, said Zou Lan, head of PBOC’s monetary policy department in an interview with Xinhua News Agency. Meanwhile, it will smooth the transmission of funds and guide financial institutions to strengthen liquidity risk management, said Zou. The PBOC will optimise funding structure by guiding more credit for technology, green, pension, inclusive and digital finance, while revitalising inefficient financial resources via debt restructuring and market clearing, according to Zou.

Authorities expect daily flights during China’s 2024 New Year festival to reach 16,500 a day, the same as 2019 and up 24% on 2023, according to Sun Wensheng, deputy director of the Comprehensive Department of the Civil Aviation Administration of China. Speaking at a press conference, Sun said the festival, starting Jan 26 and ending March 5, will see civil aviation passenger numbers hitting 2 million a day. The Yicai news agency expects the increase in flight volumes during the festival to be proportionally less than the increase in passenger volumes given the continued strength in high-speed rail. (Source: Yicai.com)

China plans to formulate over 30 key standards for automotive chips by 2025, and 70 standards by 2030 to help build a safe, open and sustainable industry, according to the latest guidelines published by the Ministry of Industry and Information Technology on Monday. The market size of the country’s automotive chips sector will likely reach CNY90.54 billion in 2024, expanding from CNY79.46 billion in 2022. (Source: Securities Times)