MNI China Daily Summary: Tuesday, September 26

EXCLUSIVE: China is set to launch a swaps scheme for debt-laden local governments to move up to CNY1.5 trillion of off-balance-sheet liabilities onto their books with extended maturities and lower interest rates, while guiding state-owned banks to support debt restructuring, policy advisors and market analysts told MNI.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY378 billion via 14-day reverse repo, with the rate unchanged at 1.95%. The operation has led to a net injection of CNY170 billion after offsetting the maturity of CNY208 billion reverse repos today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.2019% from 2.1469%, Wind Information showed. The overnight repo average rose to 1.7496% from 1.6981%.

YUAN: The currency strengthened to 7.3019 against the dollar from 7.3109 on Monday. The PBOC set the dollar-yuan central parity rate flat at 7.1727. The fixing was estimated at 7.3133 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.7425%, up from Monday's close of 2.7400%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.43% to 3,102.27, while the CSI300 fell 0.58% to 3,692.89. The Hang Seng Index lost 1.48% to 17,466.90.

FROM THE PRESS: China’s Q3 GDP growth is estimated to reach above 4.6%, slower than Q2’s 6.3%, as the higher comparison base for the same period last year kicks in, Securities Times reported citing the average forecast by eight economists. The economy will likely further recover in Q4 as consumption growth accelerates amid the Golden Week holiday and two major online shopping festivals. Exports may also grow, supported by a low base and improving overseas manufacturing activity, said Zhao Wei, chief economist at Sinolink Securities. Q4 GDP may rebound to around 5.2%, said Wen Bin, chief economist at China Minsheng Bank.

China and the EU agreed to strengthen macroeconomic policy coordination, work together to address global challenges such as climate change, food and energy security, and maintain the stability of global economic and financial markets, said the spokesman of the Ministry of Commerce following the 10th China-EU High-level Economic and Trade Dialogue held on Monday in Beijing. Both sides agreed to build a stable industry and supply chain, establish a dialogue mechanism on export control, and accelerate market access to allow more EU agricultural products, and food to enter the Chinese market. (Source: MOFCOM Website)

China believes the EU’s recent decision to launch an investigation into China’s electric vehicle trade practices will bring instability to the global automotive industry and supply chain, according to Wang Wenbin, foreign ministry spokesman. Wang, speaking at a recent press conference, said the EU’s move was not in the interest of either party and called on policymakers to create a non-discriminatory and predictable market environment for the common development of China-EU electric vehicle industry in accordance with the China-EU comprehensive strategic partnership. (Source: Yicai)