MNI China Daily Summary: Monday, March 24

POLICY: China will enhance policy efforts to achieve “around 5%” GDP target in 2025 and introduce additional supportive measures when necessary to bolster sustained and stable economic recovery, said Premier Li Qiang on Sunday at the China Development Forum (CDF). 

POLICY: The People's Bank of China (PBOC) sees room for further reductions to the reserve requirement ratio and will focus monetary policy on safeguarding asset prices, said Li Yang, chairman of National Institution for Finance and Development, during the CDF on Sunday.

POLICY: China should focus on low-income consumption potential via reforms that increase their access to services as short-term “helicopter stimulus” is unsustainable, Liu Shijin, former vice president of Development Research Centre of the State Council, said on Sunday during the CDF. 

POLICY: China should focus on further opening up its services sector, particularly by reducing the negative list for foreign investment, said Wang Yiming, vice chairman of the China Center for International Economic Exchanges during the CDF on Monday.

POLICY: China should strengthen the monitoring of cross-border capital flows to prevent large fluctuations impacting the macroeconomy when attracting foreign investment, said Wang Chunying, president of the Export-Import Bank of China during the CDF on Monday. 

LIQUIDITY: The PBOC conducted CNY135 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY346 billion after offsetting the maturity of CNY481 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.7690% from 1.7688%, Wind Information showed. The overnight repo average decreased to 1.7469% from 1.7499%.

YUAN: The currency weakened to 7.2520 against the dollar from 7.2489 on Friday. The PBOC set the dollar-yuan central parity rate higher at 7.1780, compared with 7.1760 set on Friday. The fixing was estimated at 7.2510 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.8375%, up from Friday's close of 1.8350%, according to chinamoney.com.cn.

STOCKS: The Shanghai Composite Index gained 0.15% to 3,370.03 while the CSI300 index increased 0.51% to 3,934.85. The Hang Seng Index edged up 0.91% to 23,905.56.

FROM THE PRESS: China views expanding domestic demand as a long-term strategy and will make consumption the main driving force of economic growth, said Han Wenxiu, deputy director at the Central Financial and Economic Affairs Commission. China’s proportion of consumption in the national economy was about 20 percentage points lower than developed countries, Han noted. (Source: China Securities Journal)

Commercial banks can temporarily increase personal consumer loans to CNY500,000 from CNY300,000 and raise personal internet consumer lending to CNY300,000 yuan from CNY200,000, according to an announcement from the National Financial Supervisory and Administration Bureau. Dong Ximiao, chief researcher at Zhaolian Financial, said the credit limit increase will help leverage the role of consumer finance in satisfying large-scale consumption needs and expanding domestic demand.

China must step up financial services to support Chinese firms expanding abroad, after outbound direct investment increased 11.3% y/y in 2024, according to speakers at the recent Lujiazui Financial Salon. Financial institutions need to ensure the efficient operation of corporate funds through digital and basic settlement services, as well as providing cash management and global treasury services, according to Wang Xiao, president of Bank of China Shanghai Branch.