MNI China Daily Summary: Tuesday, July 30

POLICY: China will focus on boosting consumption to expand domestic demand, strengthen countercyclical adjustments and reserve, and launch additional policy measures in a timely manner, the state-run Xinhua News Agency reported following the Politburo meeting on Tuesday.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY216.27 billion via 7-day reverse repo, with rate unchanged at 1.70%. The operation has led to a net drain of CNY51.03 billion after offsetting the CNY267.3 billion maturity today, according to Wind Information.

RATES: China's seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.8336% from 1.9139%, Wind Information showed. The overnight repo average rose to 1.6427% from 1.6371%.

YUAN: The currency strengthened to 7.2472 from 7.2577 at Monday's close. The PBOC set the dollar-yuan central parity rate higher at 7.1364, compared with 7.1316 set on Monday. The fixing was estimated at 7.2592 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.1350%, down from Monday's close of 2.1506%, according to chinamoney.com.cn.

STOCKS: The Shanghai Composite Index lost 0.43% to 2,879.30 while the CSI300 index edged down 0.63% to 3,369.38. The Hang Seng Index fell 1.37% to 17,002.91.

FROM THE PRESS: The China Securities Regulatory Commission will guide listed companies to increase dividends and buybacks, and improve corporate governance while preventing risks in key areas such as private equity, trading venues, bond defaults, and industry institutions, the 21st Century Business Herald reported following a recent CSRC work meeting. The authority will maintain smooth market operations and improve expectation management, the news outlet noted.

China plans to accelerate infrastructure connectivity to enhance global supply chain resilience and stability, according to Zhao Ping, president at the China Council for the Promotion of International Trade Research Institute. Beijing will maintain the multilateral trading system with the World Trade Organization at its core and expand unilateral opening to developing countries. Officials will put forward a global supply chain cooperation initiative and promote the liberalization of trade and investment, Zhao added. (Source: 21st Century Business Herald)

Central banks' recent increase in yuan allocation will further stimulate China's currency internationalisation, according to Wang Youxin, a senior researcher at the China Banking Research Institute. The RMB Internationalisation Index reached 6.27 in 2023, up 22.9% year-on-year, according to a recent Renmin University report. Yuan internationalisation will increase foreign capital allocation in China, helping to improve market efficiency and openness, Wang noted.