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MNI China Press Digest Aug 12: Liquidity, Loan Rates, Flights

MNI summarises the key stories from the Chinese press on Friday.

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The following lists highlights from Chinese press reports on Friday:

  • The People's Bank of China’s move to deploy small injections via open market operations is a result of less demand from primary dealers amid ample liquidity conditions, not a sign of tightening, the China Securities Journal reported, citing analysts. The PBOC has been injecting just CNY2 billion in seven-day reverse repos on a daily basis since July 27, because the bids submitted by primary dealers have continued to decrease, the newspaper said. Increased fiscal spending, tax rebates and profits turned over by the central bank drove up liquidity supply in the money market in Q2, which left the average DR007 rate at 1.72%. Liquidity will remain loose in August, with a large amount of local government special bonds being allocated by the end of the month, the newspaper said, citing analysts.
  • The interest rates applied to China’s corporate loans may continue to fall as the PBOC is keen to expand credit, while the weakness of the real economy has limited demand for such loans, the 21st Century Business Herald reported, citing analysts. The weighted average interest rate of newly issued corporate loans in June was 4.16%, a record low, the newspaper said, citing Wang Yifeng, analyst at Everbright Securities. For the household sector, the weighted average mortgage rate sat at 4.62% in June, hitting the lowest level observed since 2017, as unfinished housing projects dampened buyers’ confidence, the newspaper said, citing Dai Zhifeng, director at Zhongtai Securities Research Institute. The central bank may guide mortgage rates lower to help boost housing demand, the newspaper said, citing Wang.
  • Direct flights between China and the UK have resumed, adding to the list of international non-stop routes returning and new flights being outlined in August, the 21st Century Business Herald reported. China Southern Airlines has the most international routes in August, totaling 42, followed by Eastern Airlines’ 21 routes and Xiamen Airlines’ 17, according to the newspaper's calculations. The search volume of direct flights between China and the UK on the ticket-booking Qunar platform nearly doubled on Wednesday, with the number of air ticket bookings increasing by 32% compared to the previous day, the newspaper said.
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The following lists highlights from Chinese press reports on Friday:

  • The People's Bank of China’s move to deploy small injections via open market operations is a result of less demand from primary dealers amid ample liquidity conditions, not a sign of tightening, the China Securities Journal reported, citing analysts. The PBOC has been injecting just CNY2 billion in seven-day reverse repos on a daily basis since July 27, because the bids submitted by primary dealers have continued to decrease, the newspaper said. Increased fiscal spending, tax rebates and profits turned over by the central bank drove up liquidity supply in the money market in Q2, which left the average DR007 rate at 1.72%. Liquidity will remain loose in August, with a large amount of local government special bonds being allocated by the end of the month, the newspaper said, citing analysts.
  • The interest rates applied to China’s corporate loans may continue to fall as the PBOC is keen to expand credit, while the weakness of the real economy has limited demand for such loans, the 21st Century Business Herald reported, citing analysts. The weighted average interest rate of newly issued corporate loans in June was 4.16%, a record low, the newspaper said, citing Wang Yifeng, analyst at Everbright Securities. For the household sector, the weighted average mortgage rate sat at 4.62% in June, hitting the lowest level observed since 2017, as unfinished housing projects dampened buyers’ confidence, the newspaper said, citing Dai Zhifeng, director at Zhongtai Securities Research Institute. The central bank may guide mortgage rates lower to help boost housing demand, the newspaper said, citing Wang.
  • Direct flights between China and the UK have resumed, adding to the list of international non-stop routes returning and new flights being outlined in August, the 21st Century Business Herald reported. China Southern Airlines has the most international routes in August, totaling 42, followed by Eastern Airlines’ 21 routes and Xiamen Airlines’ 17, according to the newspaper's calculations. The search volume of direct flights between China and the UK on the ticket-booking Qunar platform nearly doubled on Wednesday, with the number of air ticket bookings increasing by 32% compared to the previous day, the newspaper said.