MNI China Daily Summary: Wednesday, May 24:

EXCLUSIVE: China’s car exports will remain a significant contributor to export growth in 2023, after the country passed Germany to lag only Japan for foreign auto sales by volume in 2022, fuelled by demand for cheap electric vehicles and as domestic firms shift units abroad amidst a fierce price war at home.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY2 billion via 7-day reverse repos, with the rates unchanged at 2.00%. The operation has led to an unchanged liquidity after offsetting the maturity of CNY2 billion reverse repo 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) decreased to 1.7497% from 1.7712%, Wind Information showed. The overnight repo average increased to 1.2875% from the previous 1.2233%.

YUAN: The currency strengthened to 7.0418 against the dollar from 7.0505 on Tuesday. The PBOC set the dollar-yuan central parity rate higher at 7.0560, compared with 7.0326 set on Tuesday.

BONDS: The yield on 10-year China Government Bonds was last at 2.7560%, up from Tuesday's close of 2.7500%, according to Wind Information.

STOCKS: The Shanghai Composite Index fell 1.28% to 3,204.75 while the CSI300 index decreased 1.38% to 3,859.09. The Hang Seng Index was down 1.62% to 19,115.93.

FROM THE PRESS: China must deepen competition law reforms to construct a unified national market, according to Chen Bing, director at the Competition Law Research Center at Nankai University. Local governments' use of coupons to boost consumption and subsidies to enhance industry have helped the economic rebound, but officials should remain cautious not to use the measures excessively, as it could lead to market distortions and hamper efforts to improve the unified market, he said. Chen’s comments come after the State Council released statements on constructing a unified market earlier this week. (Source: Yicai)

Sales of passenger vehicles in China are forecasted to reach 1.7 million units in May, up 6.6% m/m and 27.7% y/y, according to a note from the China Car Passenger Federation. Analysts noted attendance at auto shows was strong and manufacturers had continued to offer large discounts throughout the month. The government’s decision to postpone the ban on selling high emission cars to the end of the year had taken pressure off distributors and allowed the market to stabilise, the federation said. Analysts noted customer demand cooled down towards the end of the month, following a strong start.

China will make efforts to further converge its domestic system with international trading rules, according to a recent inter-ministerial working group meeting. The Ministry of Commerce said in a note on their website that policy makers will focus on integrating domestic and foreign trade, which includes promoting industrial integration and boosting the digital trade economy. Authorities should reform laws and regulations, and converge China's standardisation and certification system with international standards. (Source: Yicai)