MNI China Daily Summary: Friday, November 14

EXCLUSIVE: The People’s Bank of China is likely to increase treasury bond purchases this year, though last month’s smaller-than-expected CNY20 billion restart signalled the Bank’s preference to avoid sharply pushing down yields, economists and traders told MNI, noting the focus will likely shift more toward medium- to long-term maturities compared with 2024.

POLICY: China’s fixed-asset investment growth fell further by 1.7% y/y in the first 10 months, expanding from the 0.5% fall in the Jan-Sep period and missing the -0.8% median forecast, also hitting the lowest level since Jun 2020, National Bureau of Statistics data showed.

POLICY: China aims to leverage the stability of its domestic circulation to offset external uncertainties over the next five years, targeting an economic growth rate of at least 4.5%, Yang Weimin, former vice chairman of the Economic Affairs Committee of the CPPCC National Committee, said at Caixin Summit 2025.

POLICY: The People’s Bank of China will promote the cross-border use of the yuan in trade, investment and financing, and provide more products to facilitate foreign investor participation in the stock and bond markets, while improving the payment system and incorporating the currency's use into multilateral and bilateral agreement frameworks, Deputy Governor Tao Ling said at the Caixin Summit.

POLICY: China needs to maintain expansionary fiscal and monetary policies to offset the long-term drag from the real-estate slowdown, former Finance Minister Lou Jiwei said at the Caixin Summit.

POLICY: The 0.2% y/y rise of China's CPI in October reflected a positive trend, Fu Linghui, spokesperson and chief economist at the National Bureau of Statistics, told reporters, but he cautioned that overall prices remain low and demand in the economy is still weak.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY212.8 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY71.1 billion after offsetting maturities of CNY141.7 billion today, according to Wind Information

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.4673% from 1.4782% , Wind Information showed. The overnight repo average increased to 1.3729% from 1.3199%. 

YUAN: The currency weakened to 7.1007 against the dollar from the previous 7.0959. The PBOC set the dollar-yuan central parity rate lower at 7.0825, compared with 7.0865 set on Thursday. The fixing was estimated at 7.0989 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.7800%, unchanged from previous, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.97% to 3,990.49, while the CSI300 index decreased 1.57% to 4,628.14. The Hang Seng Index fell 1.85% to 26,572.46.

FROM THE PRESS: The sharp decline in new loans in October is in line with seasonal patterns, and the significant year-on-year decrease was mainly due to a substantial drop in new household loans, reflecting continuous adjustment in the real-estate market and weakness in consumer spending, Beijing Business Today reported citing Wang Qing, analyst with Golden Credit Rating. Meanwhile, demand for business loans also weakened amid slowing economic momentum since Q3, Wang added, noting the rapid and frequent issuance of government bonds will temporarily squeeze out certain corporate loans. New loans increased by only CNY220 billion in October, a decrease of CNY1.07 trillion compared to the previous month and a decline of CNY280 billion compared to the same period last year, the newspaper said.

Several provinces including Jiangsu, Guangxi and Hubei have kicked off major construction projects in Q4 to support 2025 growth, Securities Times reported. The excavator index, considered as a barometer of infrastructure construction, rebounded in October, with the sale of various types of excavators increasing by 7.77% y/y and the operating hours and utilisation rate of excavators also increasing from the previous month, the newspaper said citing data from the China Construction Machinery Association. However, the CNY500 billion additional funds from policy-based financial instruments allocated recently may manifest its supporting role in infrastructure investment in Q1 2026, considering seasonal factors, the newspaper said citing Yuan Chuang, chief economist at Chasing Securities.

Promoting a reasonable recovery in prices requires leveraging the combined effect of macroeconomic policies and maintaining policy consistency, Shanghai Securities News reported citing analysts. Monetary policy remains supportive to create a suitable monetary and financial environment for price recovery, but its marginal efficiency has declined even with remaining policy room. It is necessary to shift the macroeconomic control approach towards boosting social welfare and consumer spending, while also focusing on building a unified national market to improve supply structure and eliminate ineffective supply, the newspaper said. China's inflation target of around 2% should be viewed as a medium- to long-term goal, the newspaper added.