MNI China Daily Summary: Tuesday, June 23

     EXCLUSIVE: Retail sales in China are set to register positive growth for

the first time this year in June as consumers largely shrug off concerns about

coronavirus and return to buying everything from automobiles to cosmetics,

government-linked researchers told MNI, but one added that longer-term gains may

require more support for personal income. "Goods consumption is nearing

pre-pandemic levels and service consumption is slowly recovering. Growth of

total retail sales is likely to turn positive in June," Guan Lixin, a senior

researcher affiliated with the Ministry of Commerce, told MNI.

     EXCLUSIVE: China's experimental digital currency could eventually allow

more precise monetary policy and boost international use of the yuan,

challenging established cross-border payment systems such as SWIFT, policy

advisors told MNI, adding that its design will aim not to sap deposits at

commercial banks or reduce their capacity to lend.

     POLICY: The People's Bank of China (PBOC) issued CNY10 billion six-month

bills in Hong Kong today with an average yield of 2.21%. The issuance was widely

welcomed by foreign banks, central banks, and fund companies and the total

amount of bids were 3.4 times more than the issuance, reflecting global

investors' confidence in the Chinese economy, according to a statement on the

PBOC website. 

     LIQUIDITY: The PBOC injected CNY90 billion via 7-day reverse repos and

CNY110 billion via 14-day reverse repos with rates unchanged. This resulted in a

net injection of CNY200 billion as no reverse repos matured today, according to

Wind Information. The operations aim to maintain stable liquidity at the end of

the half year, the PBOC said on its website.

     RATES: The seven-day weighted-average interbank repo rate for depository

institutions (DR007) decreased to 2.1070% from 2.1393% on Monday, Wind

Information showed. The overnight repo average fell to 1.9409% from 2.1344%.

     YUAN: The yuan strengthened to 7.0663 against the dollar from 7.0770 on

Monday. PBOC set the dollar-yuan central parity rate lower for a second trading

day at 7.0671, compared with the 7.0865 set on Monday.

     BONDS: The yield on 10-year China Government Bonds was last at 2.9100%,

down from the close of 2.9175% on Monday, according to Wind Information.

     STOCKS: The Shanghai Composite Index rose 0.18% to 2,970.62. Hong Kong's

Hang Seng Index rallied 1.62% to 24,907.34.

     FROM THE PRESS: China and the European Union will strive to complete

negotiations on an investment and trade deal this year and reach a

comprehensive, balanced and high-level investment agreement, said Premier Li

Keqiang during the China-EU summit online. China hoped the EU will keep its

trade and investment markets as open as China's, relax export restrictions and

facilitate bilateral high-tech trade, Li said. Both sides should strengthen

macroeconomic policy coordination and jointly maintain the stability of the

global supply chain, Li said.

     China has room to lower its medium-term lending facility (MLF) and open

market operation rates by about 40 bps this year, the National Business Daily

said citing Wang Qing, chief analyst with Golden Credit Ratings. While the PBOC

kept the LPR unchanged yesterday, it is expected to fall in the second half of

the year following possible MLF rate cuts as banks seek to fulfil the target of

giving up CNY1.5 trillion in profits to support businesses, the newspaper cited

Wang as saying.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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