MNI China Daily Summary: Friday, April 11

EXCLUSIVE: The People’s Bank of China (PBOC) is likely to accelerate its easing pace, lowering banks’ reserve requirement ratios and interest rates as well as deploying targeted facilities, to mitigate the impact of heightened tariffs, while guiding lenders to support exporters and moving to stabilise stock markets, Bank of China Research Chief Zong Liang told MNI.

EXCLUSIVE: China will continue to diversify its foreign reserves if economic and trade relations with Washington deteriorate and the safe-haven status of U.S. debt comes into question, an economist at a state-owned bank told MNI, noting that the PBOC will continue to ensure a stable yuan to anchor market confidence amid tariff tensions.

POLICY: China can offset the negative impact of U.S. tariffs by leveraging procurement towards domestic firms impacted by the duties, the Public Procurement Branch of the China Federation of Logistics and Purchasing said.

LIQUIDITY: The PBOC conducted CNY28.5 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY28.5 billion as no reverse repo matured today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.6534% from 1.7114% , Wind Information showed. The overnight repo average decreased to 1.6226% from 1.6538%. 

YUAN: The currency strengthened to 7.3245 against the dollar from the previous 7.3429. The PBOC set the dollar-yuan central parity rate lower at 7.2087, compared with 7.2092 set on Thursday, in the first day of strengthening in seven trading days. The fixing was estimated at 7.3506 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.6400%, down from the previous close of 1.6450%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.45% to 3,238.23, while the CSI300 index increased 0.41% to 3,750.52. The Hang Seng Index rallied 1.13% to 20,914.69.

FROM THE PRESS: More cities will promote home purchase subsidies to stimulate demand, Securities Times reported, citing expectations from Chen Wenjing, research director of China Index Academy. Yiwu city recently subsidised first-time home buyers and families with multiple children, while Hohhot city offered up to CNY50,000 to first-time buyers of newly built residential properties across four districts, the newspaper said. The market expects additional support measures in April, often a policy window period, with lower mortgage rates and further relaxation of residential purchase limits, the newspaper said.

Washington’s imposition of tariffs against China will inevitably reduce the domestic audience’s appetite for U.S. movies, according to a spokesperson for the National Film Administration, adding that authorities will respect movie-goers' choices by moderately reducing the number of imported American films. Statistics from the State Film Administration showed box office receipts totalled CNY42.5 billion in 2024, of which domestic films accounted for 78.7%. As the second largest market in the world, China will introduce more global movies to meet market demand going forwards, the spokesperson continued. (Source: Yicai)

China’s CPI contracted 0.1% y/y in March, narrowing from the -0.7% in February, mainly driven by base effects, according to Feng Lin, executive director at Orient Securities. Price levels in April are expected to remain unchanged y/y given recent trends, Feng added. Minsheng Bank Chief Economist Wen Bin said price levels are expected to rise moderately with the gradual implementation of more proactive macroeconomic measures leading to a steady expansion of domestic demand. (Source: Securities Daily)