MNI China Daily Summary: Friday, Nov 24

EXCLUSIVE: China’s import volumes of key food commodities such as soy, maize and wheat have likely peaked as the country seeks to increase domestic output on national security grounds, local analysts told MNI.

POLICY: China’s Belt and Road Initiative will promote better trade and financial integration during the next phase of the project, according to Zhou Zhongguo, deputy director at the Ministry of Commerce.

LIQUIDITY: The PBOC conducted CNY664 billion via 7-day reverse repo on Friday, with the rate unchanged at 1.80%. The operation has led to a net injection of CNY312 billion after offsetting the maturity of CNY352 billion reverse repos today, according to Wind Information.

RATES: China's seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 2.1803% from 2.0199%, Wind Information showed. The overnight repo average decreased to 1.8364% from the previous 1.8929%.

YUAN: The currency weakened to 7.1529 against the dollar from 7.1406 on Thursday. The PBOC set the dollar-yuan central parity rate lower at 7.1151, compared with 7.1212 set on Thursday.

BONDS: The yield on 10-year China Government Bonds was last at 2.7075%, up from 2.7050% at Thursday's close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.68% to 3,040.97 while the CSI300 index fell 0.66% to 3,538.01. The Hang Seng Index was down 1.96% to 17,559.42.

FROM THE PRESS: China and Australia will work together to resolve trade issues and reach the consensus made by both leaders recently, according to Shu Jueting, spokesperson for the Ministry of Commerce. Speaking at a press conference, Shu said the countries are moving in the right direction and recent progress in settling WTO disputes showed resolutions were possible. On the U.S., China hopes Washington will translate the San Francisco commitments into practical actions and create good conditions for two-way trade and investment. (Source: MOFCOM)

The State Council will encourage financial institutions to support the development of small and medium-sized enterprises listed on the Beijing Stock Exchange and the New Third Board, according to a document on gov.cn. It will support commercial banks to customise financial products and services for innovative SMEs, develop credit, guarantees and supply-chain finance that fit into their R&D, technology introduction, mergers and acquisitions, and moderately relax loan requirements for listed SMEs.

China should diversify its sources of steel resources and cut the dependency on iron ore imports as speculation-driven volatility in overseas iron ore prices erodes profits of domestic steel companies, Yicai.com reported citing analysts. Prices have reached “unreasonable” levels and only 16.88% of the 247 sample steel mills were profitable. China should accelerate its “cornerstone plan” to diversify steel resources from overseas, domestic mines and scrap steel. The price of imported iron ore continued to run at a high level of over USD125 per ton since late October as the market expected higher infrastructure demand at the backdrop of the issuance of additional CNY1 trillion China Government Bonds.