MNI China Daily Summary: Wednesday, Aug 21

MNI (MNI (BEIJING)) - POLICY: China is expected to import 2 million tonnes of primary aluminium in 2024, up 45% y/y, driven by growth in Indonesian exports and long-term contracts, Shanghai Metals Market said in a note.

LIQUIDITY: The PBOC conducted CNY258 billion via 7-day reverse repos, with the rate unchanged at 1.70%. The operation led to a net drain of CNY111.2 billion after offsetting maturities of CNY369.2 billion, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.8229% from 1.7801%, Wind Information showed. The overnight repo average increased to 1.7320% from 1.7296%.

YUAN: The currency strengthened to 7.1339 against the dollar from 7.1419 on Tuesday. The PBOC set the dollar-yuan central parity rate lower at 7.1307, compared with 7.1325 set on Tuesday.

BONDS: The yield on 10-year China Government Bonds was last at 2.1100%, up from 2.1050 at Tuesday's close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.35% to 2,856.58 while the CSI300 index fell 0.33% to 3,321.64. The Hang Seng Index decreased 0.69% to 17,391.01.

FROM THE PRESS: Chinese officials hope Brussels and Beijing can avoid escalating trade frictions following the EU’s recent proposal to impose up to a 36% duty on Chinese-made electric vehicles, China’s Ministry of Commerce has said. The proposal was not based on mutual facts, used sampling techniques to distort results, and did not fully reflect Beijing’s opinions, the ministry said. (Source: 21st Century Herald)

Authorities will accelerate efforts to liberalise foreign trade and investment for services as China aims for high-level opening, according to a State Council executive meeting. Officials will support the international development of professional services such as finance, consulting, design, certification, education, and medical care, alongside cancelling restrictions on foreign investment in the manufacturing sector. The meeting showed goods and service trade were now of equal importance, said Yang Chang, chief analyst at Zhongtai Securities.

China’s central bank may still lower the 7-day reverse repurchase rate in Q4 by 10 to 20 basis points followed by an LPR reduction, given current economic performance and price levels, said Wang Qing, chief macro analyst at Orient Securities. Banks left benchmark lending rates unchanged in August as authorities remained focused on guiding enterprise and household credit rates lower following July’s loan prime rate cut, Wang added. Wen Bin, chief economist at China Minsheng Bank, said banks maintained the LPR rate given continued net interest margin pressure.