MNI China Daily Summary: Wednesday, April 9

POLICY: China reiterated that it never deliberately pursues a trade surplus and continues to implement the first phase of the China-US economic and trade agreement, the State Council said in a published white paper on the topic. Authorities highlighted Beijing held USD759 billion in U.S. Treasury bonds, making it the second largest foreign holder.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY118.9 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY111 billion after offsetting the maturity of CNY229.9 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.7623% from 1.7767%, Wind Information showed. The overnight repo average decreased to 1.7217% from 1.7517%.

YUAN: The currency weakened to 7.3498 to the dollar from 7.3368 on Tuesday. The PBOC set the dollar-yuan central parity rate higher at 7.2066, compared with 7.2038 set on Tuesday, marking the weakest rate since Sep.11, 2023. The fixing was estimated at 7.3387 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.6425%, down from Tuesday's close of 1.6500%, according to Wind Information.

STOCKS: The Shanghai Composite Index was up 1.31% to 3,186.81, while the CSI300 index gained 0.99% to 3,686.79. The Hang Seng Index edged up 0.68% at 20,264.49.

FROM THE PRESS: An additional 50% U.S. tariff on top of the existing 54% duties against China would trigger significant supply-chain disruptions, though the economic impact may be diminished, according to Zhou Mi, a researcher at the Chinese Academy of International Trade and Economic Cooperation. The Chinese government and businesses should work to minimise risk exposure by carefully managing their choice of trading partners, order cycles, and supply-chain interactions, while also preparing for potential fluctuations in supply and pricing, said Zhou. (Source: 21st Century Business Herald)

China and the EU are each other's most important trading partners, with highly complementary economies and close interests, Premier Li Qiang told EC President Ursula von der Leyen on a recent phone call, Xinhua news agency reported. The two sides should promote a new round of China-EU high-level exchanges on the economy, trade, green and digital, Li added. Beijing and Brussels are both advocates of economic globalisation and trade liberalisation, and firm defenders of the WTO, Li continued.

China’s Chief Economist Confidence Index reached 50.33 in April, down from March’s 50.65 but remaining above the breakeven point of 50, Yicai news outlet reported. Economists expect external demand pressures will weaken China's economic recovery and authorities will likely introduce additional targeted and forward-looking measures to stabilise support for the real economy. Respondents anticipated March’s trade surplus to reach USD78.5 billion with imports down -2.35% y/y and exports up 4.03%.