MNI China Daily Summary: Friday, April 10

EXCLUSIVE: Robust exports and government-led infrastructure investment are expected to lift China’s Q1 GDP growth to around 5% from Q4’s 4.5%, before a modest slowdown in Q2, advisors told MNI, noting the country’s deep supply chains and diversified trade partnerships have helped mitigate the impact of the Iran conflict.

DATA: China’s Producer Price Index rose 0.5% y/y in March, reversing February's 0.9% drop and marking the first rise since Sept 2022, driven by a rapid rise in international commodity prices, according to data from the National Bureau of Statistics. 

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY2 billion via seven-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY1 billion after offsetting maturities of CNY1 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.3233% from 1.3310%, Wind Information showed. The overnight repo average increased to 1.2257% from 1.2209%. 

YUAN: The currency strengthened to 6.8333 against the dollar from the previous 6.8410. The PBOC set the dollar-yuan central parity rate higher at 6.8654, compared with 6.8649 set on Thursday. The fixing was estimated at 6.8332 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.8100%, up from the previous close of 1.8070%, according to Wind Information.

STOCKS: The Shanghai Composite Index rose 0.51% to 3,986.22, while the CSI300 index increased 1.54% to 4,636.57. The Hang Seng Index edged up 0.55% to 25,893.54.

FROM THE PRESS: China’s passenger car market is expected to improve gradually in Q2 and return to positive growth in the second half of the year, Economic Information Daily reported, citing Cui Dongshu, secretary general of China Passenger Car Association. The 17% decline in passenger vehicle retail sales in Q1, continuing the weak performance since Q4 last year, reflects pressure on consumers’ purchasing power and requires long-term support measures to stabilise growth, said Cui. However, exports of passenger vehicles reached 1.8 million units in Q1, a year-on-year increase of 61%, CPCA data showed.

Local governments are accelerating the construction of major projects entering Q2, directly boosting fixed asset investment growth, Securities Daily reported, citing analysts. Inner Mongolia plans to implement 3,668 major projects throughout 2026, and nearly 60% of them have started construction since April. Henan province said it will ensure completing half of the investment task by the end of Q2.

The recent establishment of the Bureau of Overseas State-owned Assets by the State-owned Assets Supervision and Administration Commission (SASAC) will help safeguard the rights and interests of Chinese SOEs investing abroad amid rising geopolitical tensions, Securities Times reported, citing analysts. The Bureau will conduct thorough oversight of key entities, major projects, and high-risk countries to prevent risks such as loss of state-owned assets and transfer of benefits, while setting up an assessment and error-tolerance mechanism to dispel SOEs’ investment concerns. As of March 2022, the total overseas assets of central-government-owned enterprises reached CNY8 trillion, with more than 8,000 projects distributed in over 180 countries and regions, SASAC data showed.