MNI China Daily Summary: Friday, September 19

EXCLUSIVE: China’s reliance on ASEAN countries to reroute goods to the U.S. in a bit to skirt tariffs is unsustainable amid rising U.S. transshipment curbs, and will threaten export performance next year, policy advisors and industry insiders told MNI.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY354.3 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY124.3 billion after offsetting maturities of CNY230 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.5096% from 1.5566%, Wind Information showed. The overnight repo average decreased to 1.4644% from 1.5127%. 

YUAN: The currency weakened to 7.1125 against the dollar from the previous 7.1079. The PBOC set the dollar-yuan central parity rate higher at 7.1128, compared with 7.1085 set on Thursday. The fixing was estimated at 7.1174 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.8750%, up from the previous close of 1.8500%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.30% to 3,820.09, while the CSI300 index increased 0.08% to 4,501.92. The Hang Seng Index barely changed to close at 26,545.10.

FROM THE PRESS: The Federal Reserve’s September rate cut could lead to reserve requirement ratio (RRR) and interest rate reductions in China, according to Liu Tao, senior researcher at Guangkai Chief Industry Research Institute. At the same time, the central bank may increase targeted liquidity support for specific sectors such as technological innovation and incremental use of structural monetary policy tools, according to Ming Ming, chief economist at CITIC Securities. However, Zhao Qingming, deputy dean at the Huiguan Information Technology Research Institute, said policymakers were unlikely to cut interest rates in the short term given the strong stock market. (Source: Securities Daily)

China’s first new energy electricity price bidding mechanism, launched in Shandong Province, resulted in a photovoltaic clearing price of CNY0.225 per kWh, below the expected CNY0.26 per kWh, according to Zhang Xiaobin, secretary-general at the Shandong Solar Energy Association. “To secure selection, many firms submitted ultra-low bids, even at the risk of losses,” Zhang noted. A new energy power station investor added that companies will need to adjust generation capacity or expand self-consumption if the market remains oversupplied. (Source: Yicai)

Trains on China’s western land–sea new corridor, a key logistics channel connecting western China with Southeast Asia and global markets, have transported more than 1 million twenty-foot equivalent unit (TEU) of container cargo this year, up 72.5% y/y and marks the first time above one-million-TEU, according to data from the National Railway Administration. Hao Panfeng, deputy secretary-general at the China Container Industry Association, said strengthened industrial chain cooperation between China and ASEAN, expanded transport capacity and the continuous diversification of train services had contributed to the growth. (Source: Yicai)