MNI China Daily Summary: Friday, February 13

EXCLUSIVE: China’s fixed-asset investment (FAI) growth is likely to stabilise later this year after contracting 3.8% in 2025, as major national projects under the current Five-Year Plan begin to materialise in the second half, policy advisors told MNI, adding that the medium-term growth outlook remains subdued amid broader structural economic changes.

EXCLUSIVE: China’s Producer Price Index (PPI) is projected to turn positive in the third quarter, ending a 40-month stretch of contraction, as strong capex investment at home and abroad prompts price increases, local analysts told MNI.

DATA: China's M2 money supply grew by 9.0% y/y in January, the highest growth rate since December 2023, beating forecasted 8.3% growth and December's 8.5% gain, data released by the People's Bank of China (PBOC) showed. New yuan loans increased for the third month running, up by CNY4.71 trillion in January, surging from the previous CNY910 billion and hitting a one-year high. Total social financing rose by CNY7.22 trillion, up from CNY2.21 trillion in December, setting a new high.

LIQUIDITY: The PBOC conducted CNY145 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY113.5 billion after offsetting maturities of CNY31.5 billion, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.4259% from 1.5257%, Wind Information showed. The overnight repo average decreased to 1.2645% from 1.3620%. 

YUAN: The currency weakened to 6.9114 against the dollar from the previous 6.9016. The PBOC set the dollar-yuan central parity rate lower at 6.9398, compared with 6.9457 set on Thursday. The fixing was estimated at 6.9069 by a Bloomberg survey today.

BONDS: The yield on 10-year China government bonds was last at 1.7810%, up from the previous close of 1.7730%, according to Wind Information.

STOCKS: The Shanghai Composite Index lost 1.26% to 4,082.07, while the CSI300 index decreased 1.25% to 4,660.41. The Hang Seng Index fell 1.72% to 26,567.12.

FROM THE PRESS: The yuan is expected to remain relatively strong around the holiday period as China's exports maintain robust growth and corporate foreign-exchange settlement demand continues to be released, said Wang Qing, chief macro analyst at Golden Credit Rating International. However, Pang Ming, senior research fellow at the National Institution for Finance and Development, cautioned that trading volumes typically fall during the Spring Festival, leaving the market more susceptible to shifts in sentiment. Looking further ahead, Li Chao, chief economist at Zheshang Securities, said the yuan should continue to appreciate against the U.S. dollar in the first quarter, with a potential high near 6.8 in H1.

China is shifting Spring Festival consumption away from traditional goods towards immersive experiences including culture, commerce, tourism and sports, said Zhang Juyong, a professor at the International Business School of Dalian Minzu University. He added that the growing demand for green, intelligent and premium products is driving a broader upgrade to consumption. Pan Helin, an economic expert at the Ministry of Industry and Information Technology, said this round of festival policy measures – including CNY2.05 billion already allocated by local governments – could leverage total consumption of about CNY40 billion to CNY50 billion.

China's newly launched overseas comprehensive service platform provides one-stop public services to Chinese enterprises operating abroad, offering integrated access to resources across law, taxation, finance, foreign affairs and economic and trade logistics, Yicai reported. Yu Xinding, a professor at the School of International Trade and Economics, said the platform helps companies navigate the complex institutional differences across global markets. She noted that Chinese firms once viewed overseas expansion largely as an incremental move, but now view going global as a strategic necessity to secure supply chains and ensure long-term survival, reflecting a practical approach to growing external uncertainty.