MNI China Daily Summary: Tuesday, March 5

TOP NEWS: China has set its GDP target at “around 5%” for 2024 as expected, to help boost employment and prevent risks, said Premier Li Qiang in the Government Work Report delivered at the opening ceremony of the National People's Congress. China aims to add over 12 million new urban jobs and keep the surveyed urban unemployment rate at around 5.5%.

POLICY: Chinese policy will remain fiscally expansionary in coming years to ensure annual growth of about 5% and avert the danger of low inflation, policy advisers and economists told MNI after the government announced measures which will raise its overall fiscal deficit to a recent-year-high CNY8.96 trillion in 2024.

POLICY: China will issue CNY1 trillion of ultra-long special treasury bonds in 2024 and lower the deficit-to-GDP ratio to 3%, said Premier Li Qiang.

POLICY: Chinese monetary policy will aim to maintain ample liquidity while putting idle funds to good use, and enhance the stability of capital markets, said Premier Li Qiang.

POLICY: China will focus on defusing risks in real estate, local-government debt, and small and medium financial institutions to maintain overall economic and financial stability, the government said in its annual work report.

POLICY: China has monetary and fiscal policy leeway to achieve this year's GDP target of around 5%, according to Huang Shouhong, head of the government work report drafting team. Huang, speaking to reporters, said authorities had reserves in their policy tool kit to achieve economic targets should unexpected risks occur.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY10 billion via 7-day reverse repo, with the rates unchanged at 1.80%. The reverse repo operation has led to a net drain of CNY374 billion reverse repos after offsetting CNY384 billion maturity today, according to Wind Information.

RATES: China's seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.8624% from 1.8327%, Wind Information showed. The overnight repo average increased to 1.7231% from the previous 1.7142%.

YUAN: The currency weakened to 7.1991 against 7.1990 at Monday's close. The PBOC set the dollar-yuan central parity rate higher at 7.1027, compared with 7.1020 set on Monday. The fixing was estimated at 7.1985 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.3225%, down from Monday's close of 2.3500%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.28% to 3,047.79 while the CSI300 index rose 0.70% to 3,565.51. The Hang Seng Index tumbled 2.61% to 16,162.64.

FROM THE PRESS: Authorities should promote large- and medium-sized commercial banks to establish divisions for supporting technology development, said Wei Gejun, head of Shaanxi Branch of the People's Bank of China. It is necessary to reduce costs and increase financing efficiency for tech companies by using relending and rediscount facilities. Regulators should guide banking institutions to increase their tolerance for non-performing loans appropriately. Authorities can also establish special funds and implement preferential value-added tax policies for high-tech corporate loans. (Source: 21st Century Business Herald)

Authorities should attract more medium- and long-term funds into the stock market, as pension, insurance and annuity funds’ equity allocation is far lower than the policy upper limit due to assessment requirements, said Yang Zongru, director at Guangdong Securities Regulatory Bureau. Yang said it is necessary to implement the three-year long-term assessment mechanism for state-owned insurance companies promptly, and guide pension funds to sign a long-term contract of more than five years with investment managers. (Source: Securities Times)

China should accelerate the formulation of a strategic plan to develop “new productive factors” and cope with the new round of scientific and technological revolution, said Wang Changlin, vice president of the Chinese Academy of Social Sciences. The country’s current education system and government supervision mechanism are still not adapted to the requirements of developing “new productive factors” but a number of disruptive technologies such as generative AI, synthetic biology, controllable nuclear fusion, and commercial aerospace will have a broad and profound impact on employment, income, ethics, safety and change the competitive advantages of each country. (Source: 21st Century Business Herald)