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Reporting on key macro data at the time of release.
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EXCLUSIVE: China is trying to keep relations with the U.S. from boiling over and causing further damage to its economy even as Washington steps up actions aimed at Beijing over accusations of espionage and intellectual property theft, government sources and advisors told MNI, adding that an "unreliable entity list" designed to target American companies was unlikely to be deployed for now.
POLICY: China will seek to maintain stable relations with the U.S. through equal dialogue and exchange despite attempts by a small anti-China faction to upturn bilateral cooperation, Minister of Foreign Affairs Wang Yi said in discussions with his French counterpart Jean-Yves Le Drian. The root of the current Sino-US tensions comes from the fact that some U.S. political interests are acting out of a need to secure election and maintain hegemony, challenging China's core interests and "attacking China from all directions," Wang said in a transcript released by Xinhua News Agency.
POLICY: China and the E.U. acknowledged differences of opinions in areas including 5G and foreign investment assessments after a meeting on Tuesday, while still pledging to complete negotiations and sign an investment treaty this year, China's Ministry of Commerce said. The statement followed a virtual exchange between China's Vice Premier Liu He and the Executive Vice President of the European Commission Valdis Dombrovskis on Tuesday. The Ministry said the two "frankly exchanged views" on issues such as 5G and also "exchanged in-depth views" on overcapacity.
LIQUIDITY: Liquidity conditions eased across China's interbank market through July, but still face pressures due to increased bond issuance and mid-year tax payments, the latest MNI Liquidity Conditions Index shows. The Liquidity Condition Index slid to 68.8 in July from June's 81.3, the first fall in five months. The index eased as 62.5% of respondents reported conditions unchanged, with the rest seeing a tightening in liquidity. The higher the index reading, the tighter liquidity appears to survey participants.
LIQUIDITY: The People's Bank of China (PBOC) injected CNY30 billion via 7-day reverse repos with the rate unchanged. This resulted in a net injection of CNY30 billion as no reverse repos matured today, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 2.1381% from Tuesday's close of 2.1732%, Wind Information showed. The overnight repo average decreased to 1.4372% from the previous 1.7299%.
YUAN: The currency strengthened to 6.9997 against the dollar from 7.0072 on Tuesday. The PBOC set the dollar-yuan central parity rate higher at 6.9969, compared with Tuesday's 6.9895.
BONDS: The yield on 10-year China Government Bond was last at 2.9450%, up from the close of 2.9300% on Tuesday, according to Wind Information.
STOCKS: The Shanghai Composite Index rallied 2.06% to 3,294.55, while the CSI300 index rose 2.42% to 4,679.01. Hang Seng Index edged up 0.45% to 24,883.14.
FROM THE PRESS: China's fiscal expenditure will rise in H2 as revenues increase, helping speed up infrastructure construction and investment and further assisting recovery in the manufacturing sector and among SMEs, the China Securities Journal reported citing analysts. Spending in H1 fell 5.8% y/y, below the growth target of 3.8% for this year set by the government, leaving space for more proactive fiscal policies in H2, the newspaper said citing Zhu Jianfang, chief economist of CITIC Securities. New local government special bonds and special Treasury bonds issued in Q2 and Q3 will be used mainly in H2, the newspaper said citing Wang Qing, chief macro analyst at Golden Credit Rating.
The PBOC is studying the scale of online consumer loans jointly issued by banks and fintech companies such as Ant Financial, seeking to gauge current balances, average interest rates and non-performing rates so it can formulate corresponding measures, the Beijing Business Today reported. A total of 24 banks received requests from the PBOC's Survey and Statistics Department yesterday to report their co-lending with Ant Financial, the newspaper said. China's joint-lending market has reached about CNY2 trillion, involving hundreds of banks, and Ant Financial has more than half of the market, the newspaper said.
China's growth rate this year will be over 3% with ample room for further fiscal support if necessary, the 21st Century Business Herald reported. Citing Lin Yifu, the Dean of the National School of Development at Peking University, the Herald's report said total debt raised by the central and local governments, including implicit debts, accounts for less than 60% of GDP, while the ratios of most developed countries exceed 100%.