MNI EM China Daily Summary: Monday, March 25

EXCLUSIVE: Pork prices, a major CPI driver in China, will rise steadily in H2 as government policy to reduce breeding sow population reasonably using market mechanisms to deal with excessive supply takes effect, an agricultural policy advisor has told MNI

POLICY: China will further reduce mortgage loan rates, relax restrictions on house and automobile buying and increase employment to boost consumption, said Yang Weimin, former vice minister at the Office of the Central Leading Group on Financial and Economic Affairs, during the China Development Forum 2024.

POLICY: China has expanded imports of Austrian pork meat to now include edible pig by-products, according to an announcement by the General Administration of Customs.

LIQUIDITY: The PBOC conducted CNY50 billion via 7-day reverse repo on Monday, with the rates unchanged at 1.80%. The operation has led to a net injection of CNY40 billion after offsetting CNY10 billion maturity today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.9027% from 1.8639%, Wind Information showed. The overnight repo average increased to 1.7770% from 1.7739%.

YUAN: The currency strengthened to 7.2084 against the dollar from previous close of 7.2283. The PBOC set the dollar-yuan central parity rate lower at 7.0996, compared with 7.1004 set on Friday. The fixing was estimated at 7.2222 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.4200%, up from 2.4100% at the previous close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.71% to 3,026.31 while the CSI300 decreased 0.54% to 3,525.76. The Hang Seng Index fell 0.16% to 16,473.64.

FROM THE PRESS: China will accelerate building its innovation capabilities, implement a number of major scientific and technological projects, promote high-end, intelligent and green development of manufacturing, and cultivate emerging industries, said Zheng Shanjie, head of the National Development and Reform Commission Sunday at the China Development Forum. It will create new growth engines such as biomanufacturing, commercial aerospace, and new materials, said Zheng. This also requires improving market systems and expanding high-level opening up, while the NDRC will speed up the publication of guidelines for the construction of a national unified market as well as the negative list for foreign investment for 2024, he added. (Source: Yicai)

China’s economic indicators for January and February showed improvement and the government remains confident in meeting its annual development goals, according to Lan Fo’an, finance minister. Speaking at the China Development Forum, Lan said authorities will strengthen fiscal intensity this year with a general public budget expenditure of CNY28.5 trillion, up 4% y/y. The Ministry of Finance will continue to stimulate potential consumption and enhance the role of domestic demand in driving economic growth. (Source: Yicai)

Homebuyers need not provide any housing certificates when purchasing commercial housing in Zhongshan city, a second-tier city in Southern China from Saturday, which removes the limit on the number of homes one can hold, the Beijing News reported citing Yan Yuejin, director at the E-house China Research and Development Institution. Previously, homebuyers needed to provide certificates including the number of houses purchased, records of mortgages and taxes. The relaxation will likely attract those who work in the nearby first-tier city Shenzhen, but market reaction remains to be seen with differentiated loan policies for first and second homes still in place. The move came after the State Council executive meeting on Friday urged cities to optimise housing policies further and stimulate potential demand.