MNI China Daily Summary: Thursday, April 24

EXCLUSIVE: Washington faces no easy path to revitalising domestic manufacturing through resolving global trade and capital imbalances, while current policies focused largely on bilateral tariffs against China are unlikely to resolve the deeper structural drivers of U.S. deficits, a leading economist told MNI.

POLICY: China and the U.S have not started trade talks so far and China will respond to the end should the U.S insists on confrontation, a spokesperson for Ministry of Foreign Affairs said. China and the U.S. have not engaged in any consultations or negotiations on tariff issues, let alone reached an agreement, said Guo Jiakun, adding that any dialogue must be based on equality, mutual respect, and reciprocity. 

POLICY: China will continue to open up its economy and to support free trade rules and the multilateral trading system, said People’s Bank of China (PBOC) Governor Pan Gongsheng, PBOC-run newspaper Financial News reported.

LIQUIDITY: The PBOC conducted CNY218 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY27.5 billion after offsetting the maturities of CNY245.5 billion reverse repos today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.7203% from 1.6508% previously, Wind Information showed. The overnight repo average decreased to 1.6071% from the previous 1.6255%. 

YUAN: The currency strengthened to 7.2931 against the dollar from the previous 7.2955. The PBOC set the dollar-yuan central parity rate lower at 7.2098 on Thursday, compared with 7.2116 set on Wednesday. The fixing was estimated at 7.3089 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.6577%, up from the previous close of 1.6575%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.03% to 3,297.29, while the CSI300 index decreased 0.07% to 3,784.36. The Hang Seng Index lost 0.74% to 21,909.76.

FROM THE PRESS: China should accelerate the issuance of local government bonds to maintain the scale of infrastructure investment expansion and accelerate export tax refunds to enhance the resilience of exporters in response to external challenges, said Zhang Yiqun, director of the Jilin Provincial Institute of Fiscal Science. Authorities must also accelerate the pace of fiscal spending and increase the scale of central government’s transfer payments to local governments, said Zhang.

Local governments will introduce a new round of consumption stimulus this week with a focus on boosting tourism ahead of the May Day holiday and quickening the replacement of big-ticket items, Securities Daily reported. Jilin province planned to distribute CNY600 million in consumer vouchers, and allocate another CNY200 million to support the consumer goods trade-in policy further, the newspaper said. Authorities plan to increase consumption by offering instant subsidies and discounts as well as door-to-door services, the newspaper added.

Xiamen city further upgraded the use of housing vouchers to compensate residents displaced under urban-renewal efforts, Shanghai Securities News reported. The government broadened the range of houses available for relocated residents to choose from by including second-hand housing as well as non-residential properties such as stores, offices, parking spaces, and factory buildings, the newspaper said. There will be a 5% incentive for those who purchase new homes within six months from the date of housing voucher issuance, the newspaper added.