MNI China Daily Summary: Tuesday, November 07

POLICY: China's exports decreased further in October, falling 6.4% to mark sixth straight monthly fall. The decline was worse than the consensus of 3.5% decrease and beat September's 6.2% decline.

POLICY: Despite China growth likely coming in higher than initially expected this year and next, it is unlikely to have any meaningful impact on inflation worldwide in terms for demand for global commodities channel, IMF deputy managing director Gita Gopinath told MNI Tuesday.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY353 billion via 7-day reverse repo on Tuesday, with the rate unchanged at 1.80%. The operation has led to a net drain of CNY259 billion after offsetting the maturity of CNY612 billion reverse repos today, according to Wind Information.

RATES: China's seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.8376% from 1.7691%, Wind Information showed. The overnight repo average increased to 1.6298% from the previous 1.5806%.

YUAN: The currency weakened to 7.2851 against the dollar from 7.2756 on Monday. The PBOC set the dollar-yuan central parity rate lower at 7.1776 on Tuesday, compared with 7.1780 set on Monday. The fixing was estimated at 7.2849 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.6975%, up from 2.6900% at Monday's close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.04% to 3,057.27 while the CSI300 index fell 0.35% to 3,619.76. The Hang Seng Index was down 1.65% to 17,670.16.

FROM THE PRESS: Authorities will improve the marketisation of mortgage interest rates to better support housing demand, according to the People’s Bank of China (PBOC). The PBOC aims to create a virtuous cycle between finance and real estate by expanding the space for independent pricing of mortgage interest rates and support for city governments to make good use of policies based on city-specific conditions. Central bank officials will move ahead with LPR reform and urge quoting banks to improve the quotation mechanism to enhance the effectiveness of the LPR on actual loan interest rate pricing. (Source: Yicai)

Officials in China can boost consumption by increasing residential incomes, stimulating car purchases, avoiding a real estate hard landing and lowering the cost of education and healthcare, according to Huang Qifan, vice-president at the China Institute for Innovation & Development Strategy. Residents disposable income should be raised to 52% of GDP from 43% in 2022, Huang added. China’s car production and sales volume have not increased for five years, and car ownership of 21% remains below the 40% average for developing countries with a per capita GDP of USD10,000. (Source: Yicai)

Beijing will allocate the recently announced additional CNY1 trillion government bonds according to the quality and maturity of infrastructure projects, instead of directly distributing to provinces, 21st Century Business Herald reported citing unnamed local officials. The central government will provide funding support if quality conditions are met and will not set quotas for each province, an official from a western province explained. Local governments will receive funds according to their need for post-disaster reconstruction and flood protection, the newspaper said.