MNI China Daily Summary: Tuesday, April 1

POLICY: China's Caixin manufacturing PMI came in at 51.2 in March, up from February's 50.8, staying in the expansionary zone above the 50 mark for the sixth straight month and hitting the highest level since December 2024, the financial publisher said.

POLICY: China’s upcoming Qingming Festival national holiday is expected to see entry and exit average daily passenger numbers reach 2.1 million, up 21.5% y/y, the National Immigration Administration said. 

POLICY: China’s value-added tax invoice data demonstrates the incremental policies since the end of September 2024 have boosted market confidence and effectively enhanced momentum, Wang Daoshu, deputy director at the State Administration of Taxation told reporters.

POLICY: China’s Council for the Promotion of International Trade (CCPIT) stands ready to work with the U.S. China Business Council to help business communities on both sides promote common success and promote economic and trade relations, said Ren Hongbin, president of the CCPIT, state media outlet Securities Times reported, citing his speech at a reception held Monday.

LIQUIDITY: The PBOC conducted CNY64.9 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY313 billion after offsetting the maturity of CNY377.9 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.8421% from the previous 2.1888%, Wind Information showed. The overnight repo average increased to 1.8319% from 1.8038%.

YUAN: The currency weakened to 7.2687 against the dollar from the previous 7.2516. The PBOC set the dollar-yuan central parity rate lower at 7.1775, compared with 7.1782 set on Monday. The fixing was estimated at 7.2540 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.8100%, unchanged from previous, according to chinamoney.com.cn.

STOCKS: The Shanghai Composite Index rose 0.38% to 3,348.44, while the CSI300 index increased 0.01% to 3,887.68. The Hang Seng Index gained 0.38% at 23,206.84.

FROM THE PRESS: The China Securities Regulatory Commission will make the regulatory environment for companies going public overseas more transparent, efficient and predictable, Shanghai Securities News reported, citing a CSRC statement. The CSRC will optimise processes and further strengthen coordination and information sharing among departments, while also supporting Hong Kong to consolidate its international financial centre status, the statement said.

China’s manufacturing PMI reached 50.5 in March, up 0.3 percentage points from the previous month and the highest since April 2024, demonstrating obvious signs of economic recovery, according to Zhang Liqun, a special analyst at the China Federation of Logistics and Purchasing. However, the purchasing volume and price indices both declined indicating oversupply and insufficient demand remained prominent, Zhang added. Looking ahead, officials need to increase the intensity of countercyclical adjustments and significantly strengthen government public investment to expand domestic demand, Zhang said.

The Ministry of Finance’s planned CNY500 billion special treasury bond issuance to replenish the core tier-one capital of four major state-owned banks will leverage CNY4 trillion of additional credit, Securities Daily reported, citing analysts’ expectations. The move will likely generate an eight-fold multiplier effect and increase banks’ capacity to serve the real economy, said Ming Ming, chief economist at CITIC Securities. The included banks, Bank of China, China Construction Bank, Bank of Communications and Postal Savings Bank of China, had a core tier-one capital adequacy ratio of 12.2%, 14.48%, 10.24% and 9.56% by end-2024.