MNI China Daily Summary: Friday, November 21

EXCLUSIVE: China’s RatingDog Manufacturing Purchasing Managers Index is expected to stay above the 50-point expansion threshold in November and December, despite easing 0.8 points to 50.6 in October, a senior company executive told MNI, adding that the ongoing structural shift from old industries to new-economy sectors will continue to support the index.

POLICY: China's economy should develop according to local comparative advantages to improve wealth distribution, enhance employment opportunities and allow for faster growth, accordng to Lin Yifu, professor of Economics at Peking University and former chief economist at the World Bank.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY375 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY162.2 billion after offsetting maturities of CNY212.8 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.4408% from 1.4857%, Wind Information showed. The overnight repo average decreased to 1.3209% from 1.3652%. 

YUAN: The currency strengthened to 7.1103 against the dollar from the previous 7.1167. The PBOC set the dollar-yuan central parity rate lower at 7.0875, compared with 7.0905 set on Thursday. The fixing was estimated at 7.1190 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.7850%, up from the previous close of 1.7825%, according to Wind Information.

STOCKS: The Shanghai Composite Index tumbled 2.45% to 3,834.89, while the CSI300 index fell 2.44% to 4,453.61. The Hang Seng Index lost 2.38% to 25,220.02.

FROM THE PRESS: China’s general public budget spending will need to grow 12.9% year-on-year in November and December for authorities to meet their annual budget targets, according to Yang Yewei, chief fixed-income analyst at Guosheng Securities. Yicai reported that although broad fiscal spending maintained steady growth over the first 10 months, the pace slowed noticeably in the third quarter, with a double-digit percentage decline recorded in October. With broad fiscal revenue during the first 10 months essentially flat year-on-year, spending growth of 5.2% underscores the strength of the government’s fiscal stance, Yicai noted.

China welcomes the Dutch government’s voluntary suspension of its takeover of Nexperia, the Dutch subsidiary of China’s Wingtech, viewing it as a first step in the right direction toward resolving the issue, Ministry of Commerce spokesperson He Yongqian told reporters. He said the Netherlands bears responsibility for the current disruption and should make further efforts to resolve the matter.

China’s e-commerce exports to Europe are expanding rapidly as sellers redirect their focus amid U.S. geopolitical tensions, according to Jiang Qing, head of an international freight-forwarding company who spoke with Yicai. However, growth could face headwinds if the EU moves forward with plans to eliminate the EUR150 tax-free threshold for parcels in the first quarter of next year, Jiang noted. China Chengxin International executive director Feng Lin said October’s negative 1.1% year-on-year export growth partly reflected last year’s high base as well as fewer working days this October.