MNI China Daily Summary: Tuesday, September 3

MNI (BEIJING) - POLICY: China will open an anti-dumping investigation into canola and chemical products from Canada, a notice from the Ministry of Commerce said. The ministry suspects Canada has dumped canola after imports reached USD3.5 billion in 2023, up 170% y/y, causing domestic firms to lose money. 

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY1.2 billion via 7-day reverse repos, with the rate unchanged at 1.70%. The operation led to a net drain of CNY471.3 billion after offsetting maturities of CNY472.5 billion, according to Wind Information.

RATES: China's seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.7021% from 1.6912%, Wind Information showed. The overnight repo average rose to 1.5739% from 1.5190%.

YUAN: The currency weakened to 7.1171 from 7.1115 at Monday's close. The PBOC set the dollar-yuan central parity rate higher at 7.1112 on Tuesday, compared with 7.1027 set on Monday. The fixing was estimated at 7.1117 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.1375%, down from Monday's close of 2.1490%, according to chinamoney.com.cn.

STOCKS: The Shanghai Composite Index lost 0.29% to 2,802.98 while the CSI300 index edged up 0.26% to 3,273.43. The Hang Seng Index fell 0.23% to 17,651.49.

FROM THE PRESS: China’s consumption will grow 5.5% in 2024 to CNY50.9 trillion, with the consumer trade-in policy adding 1.4 percentage points, according to estimates from Lian Ping, chief economist at the Guangkai Research Institute. Automobile scrap in H1 increased 27.6% y/y, while household appliance sales accelerated 2.1 pp above the same period last year, showing the effectiveness of such policy, Lian said. He noted China’s services spending accounts for 45% of total consumption and needs 15 years to reach developing country levels of 60%.

China will improve managing its negative list for cross-border service trade and expand the import of urgently needed services, and align with international rules such as CPTPP, Xinhua News Agency reported citing a State Council document on Monday. Authorities will also promote the integrated development of service trade and high-end manufacturing and develop detailed policies in the field of biomedicine, aircraft, automobiles, and engineering machinery, the document said.

The Caixin manufacturing PMI rebounded above 50 in August after July’s contraction, but remains constrained by external demand pressure, deflationary momentum and logistical delays, according to Wang Zhe, senior economist at Caixin. Wen Bin, chief economist at Minsheng Bank, said policy intensity has increased since August, but authorities need stronger measures to achieve the annual economic and social development goals.