MNI China Daily Summary: Tuesday, March 7

POLICY: Trade between China and Russia should use a currency that is safe and credible, according to China’s new Foreign Minister Qin Gang. Speaking at a press conference on Tuesday, Qin said currencies should not be used as weapons for bullying and imposing sanctions, when he responded to a reporter's question about plans to drop the U.S. dollar from its trading relationship with Russia.

DATA: China's exports dropped 6.8% in the first two months compared with the same period last year, beating the consensus forecast of a 9.0% decrease, while imports fell 10.2%, according to China Customs data released on Tuesday.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY3 billion of operations via 7-day reverse repos, with the rates unchanged at 2.00%. The operation led to a net drain of CNY478 billion after offsetting the maturity of CNY481 billion reverse repos today, according to Wind Information. The operation aims to keep banking system liquidity reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.8823% from 1.8253% on Monday, Wind Information showed. The overnight repo average rose to 1.4231% from the previous 1.2274%.

YUAN: The currency weakened to 6.9268 against the dollar from 6.9194 on Monday. The PBOC set the dollar-yuan central parity rate higher at 6.9156, compared with 6.8956 set on Monday.

BONDS: The yield on 10-year China Government Bond was last at 2.8840%, down from Monday's close of 2.8925%, according to Wind Information.

STOCKS: The Shanghai Composite Index down 1.11% to 3,285.10, while the CSI300 index dropped 1.46% to 4,048.85. The Hang Seng Index edged down 0.33% to 20,534.48.

FROM THE PRESS: The government work report released last weekend signalled more support for the real estate sector, as Beijing seeks to tackle “hidden risks” in the housing industry, according to Yicai.com. Citing experts, the news outlet said 2023 will focus on preventing risks among high-quality developers by improving the balance sheet situation. The construction of affordable rental housing is expected to accelerate, and real estate REITs will be expanded to encourage private capital to participate in the construction of rented accommodation. In order to boost demand, mortgage interest rates will be gradually lowered, and local governments will fine tune their purchase restriction policies according to local conditions, the news outlet said.

China’s plans to join regional regional trade agreements, as set out in the recent Work Report, shows Beijing supports institutional reform and opening up, according to Zhang Jianping, Deputy Director at MOFCOM. Efforts to join the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP), and the Digital Economy Partnership Agreement (DEPA), will bring foreign investors access to markets and growth potential based on China's open development, he said. Speaking with the 21st Century Herald, Zhang said market access for foreign investment should be expanded by implementing a new foreign investment law, with efforts made to attract investment in China's modern service industry, advanced manufacturing and efficient agriculture industry.

Foreign enterprises in China can operate at ease, with generous rewards on offer for those who develop in the country, according to the nationalist paper Global Times. The Work Report delivered by Li Keqiang last Sunday signalled the private business environment would improve, with proposals to build a unified national market and improve law-based standards in keeping with international benchmarks. Recent remarks by leaders in Beijing have shown China maintains strong support for the non-public sector, with China's steady and sustainable economic growth of great significance for the world given this years global economic slowdown, the paper said.