MNI China Daily Summary: Wednesday, March 29

EXCLUSIVE: China’s USD250 billion outbound tourism industry is set to fully recover by 2024 as air fares drop and Covid requirements are eased for Chinese travellers, former State Council adviser Henry Wang told MNI.

EXCLUSIVE: Liquidity across China’s interbank market tightened in March but remained ample as the People’s Bank of China (PBOC) took measures to support economic recovery and insulate the financial sector from nerves over western banks, including an unexpected cut in banks’ Reserve Requirements Ratio (RRR), the latest MNI Liquidity Condition Index shows.

POLICY: China will strictly control growth in coal consumption and the efficiency of its use as policymakers target a peak in carbon emissions, Zhao Chenxin, deputy director at the National Development and Reform Commission told the Boao Forum for Asia on Wednesday.

POLICY: China's central bank will use targeted tools to boost green lending and debt issuance to help reduce carbon emissions, according to Yi Gang, governor of the People’s Bank of China (PBOC).

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY200 billion of operations via 7-day reverse repos on Wednesday, with the rates unchanged at 2.00%. The operation has led to a net injection of CNY133 billion after offsetting the maturity of CNY67 billion reverse repos today, according to Wind Information. The operation aims to keep banking system liquidity stable at the end of the quarter, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.1369% from 1.9933%, Wind Information showed. The overnight repo average decreased to 0.8264% from the previous 1.0788%.

YUAN: The currency weakened to 6.8883 against the dollar from 6.8845 on Tuesday. The PBOC set the dollar-yuan central parity rate higher at 6.8771, compared with 6.8749 set on Tuesday.

BONDS: The yield on 10-year China Government Bonds was last at 2.8775%, down from Tuesday's close of 2.8800%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.16% to 3,240.06 while the CSI300 index increased 0.17% to 4,006.14. The Hang Seng Index was up 2.06% to 20,192.40.

FROM THE PRESS: The upgrade of traditional industries using AI and digitalisation – as well as structural transformation – could potentially drive future economic growth, according to Xu Hongcai, deputy director of the Economic Policy Committee of the China Policy Science Research Association. Speaking to Chinese state media on the sidelines of the 2023 Boao Forum, Xu said the upcoming second wave of urbanisation will cause structural changes that will offer growth opportunities, despite China's aging population. Yang Yanqing, director of the Planning and Development Department of Shanghai Artificial Intelligence Laboratory, added the transition to carbon neutrality can drive future economic growth if investment, incentives and structural transformation are comprehensively aligned. (Source: Securities Daily)

Energy transition and green issues will dominate 2023's Boao Forum for Asia, according to Li Baodong, secretary general of the event. Speaking at the opening press conference, Li called on the international community to strengthen cooperation and promote development, noting uncertainty over COVID-19, geopolitical conflict, economics and global warming persists. Speaking on the sideline of the forum, Yao Yang, dean of the National Development Research Institute at Peking University, said neighbouring countries will benefit from China's industrial development and closer integration with its manufacturing sector. (Source: Yicai)

Relaxed house purchase restrictions in Xiamen could lead to further liberalisation of the market nationwide, according to Li Naichao, president of the Beijing Chamber of Commerce for the Residential Real Estate Industry. In Xiamen, local single people can now buy a second house and local families with at least two children can purcahse a third. Li said the Xiamen reforms are significant due to the city's high GDP ranking in China. However, unnamed sources who spoke to Securities Daily said the central government must monitor the situation to prevent overheating.