MNI China Daily Summary: Wednesday, April 19:

EXCLUSIVE: Surprising weakness in Chinese steel prices, which comes amid questions about the strength of domestic demand amid a broader economic upswing, should give way to renewed vigor in the second half as construction activity picks up and the property market recovers, industry sources told MNI.

POLICY: Pork prices will rise towards year end as demand recovers and supply remains sufficient, according to a National Development and Reform Commission (NDRC) spokesperson.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY32 billion via 7-day reverse repos on Wednesday, with the rates unchanged at 2.00%. The operation has led to a net injection of CNY25 billion after offsetting the maturity of CNY7 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) increased to 2.1340% from 2.1139%, Wind Information showed. The overnight repo average increased to 2.1355% from the previous 2.0592%.

YUAN: The currency weakened to 6.8966 against the dollar from 6.8749 on Tuesday. The PBOC set the dollar-yuan central parity rate lower at 6.8731 on Wednesday, compared with 6.8814 set on Tuesday.

BONDS: The yield on 10-year China Government Bonds was last at 2.8550%, down from Tuesday's close of 2.8650%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.68% to 3,370.13 while the CSI300 index decreased 0.90% to 4,124.56. The Hang Seng Index was down 1.37% to 20,367.76.

FROM THE PRESS: China’s GDP will grow between 5.5-8.0% in 2023 should Q1 trends continue, according to the 21st Century Business Herald. Local analysts said the economy shows strength, but the rebound is uneven. The economy needs policy support to boost private investment, which lags behind consumption and total aggregate demand remains insufficient, the Herald said. Recent data suggests exports will grow between 0-5% this year, with analysts unsure if March’s strong export data can be sustained. The government should prioritise youth employment and boosting income levels to ensure a sustained increase in aggregate demand, the Herald added.

China’s fiscal revenue will grow faster in Q2 as the economic rebound gathers momentum, according to Xue Qian, deputy director at the National Treasury Payment Center. Recent data from the Ministry of Finance showed public expenditure for Q1 was up 6.8% y/y, while revenues gained 0.5% y/y. Other experts expect special-bond issuance to accelerate in Q2 and Q3, as construction enters peak season. Q1 expenditure grew quickly as fiscal policy was active and now the government should stimulate growth through releasing institutional dividends from supply side structural reforms, said Tian Lihui, dean at the Financial Development Research Institute of Nankai University. (Source: Securities Daily)

Beijing’s local government will continue energy vehicle subsidies to boost consumption this year, according to Yicai. Authorities will encourage financial firms to supply loans for car purchasing and support the development of the second hand market. China’s capital will prioritise cultural events and brand development, with more funding for activities including China International Fashion Week and the Beijing Film Festival. Local leaders also identified five city blocks for night time economic development. (Source: Yicai)