MNI China Daily Summary: Monday, April 21

POLICY: China's Loan Prime Rate remained unchanged on Monday, in line with expectations following Q1 GDP’s better than expected growth, which benefited from export front-loading ahead of rising U.S. tariffs. According to a People's Bank of China (PBOC) statement, the LPR was held at 3.1% for the one-year maturity and 3.6% for the five-year and over tenor. 

LIQUIDITY: The PBOC conducted CNY176 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY133 billion after offsetting the maturities of CNY43 billion reverse repos today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.7080% from 1.6925%, Wind Information showed. The overnight repo average increased to 1.7237% from 1.6647%. 

YUAN: The currency strengthened to 7.2880 against the dollar from 7.3039 on Friday. The PBOC set the dollar-yuan central parity rate lower at 7.2055, compared with 7.2069 set on Friday. The fixing was estimated at 7.2926 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.6700%, up from the previous close of 1.6475%, according to chinamoney.com.cn.

STOCKS: The Shanghai Composite Index edged up 0.45% to 3,291.43 while the CSI300 index increased 0.33% to 3,784.88. The Hang Seng Index rallied 1.61% to 21,395.14.

FROM THE PRESS: Authorities should consider subsidising logistics costs for industries with export dependence exceeding 30%, such as tax deductions for overseas warehouse construction used for cross-border e-commerce, said Zhu Keli, founding dean at the National Research Institute of New Economy. The State Council executive meeting last Friday called for customised targeted measures to stabilise employment and foreign trade in different industries and enterprises.

Officials could offset tariff disruption and declining external demand by implementing between CNY700 billion to CNY1 trillion of fiscal funds to promote domestic consumption, possibly issuing more special treasuries as early as Q2, said Wang Qing, analyst at Golden Credit Rating. The CNY300 billion consumer goods trade-in scheme should be expanded to include more goods and services, and increased funding, in response to growing momentum in redirecting export-oriented production toward domestic markets beginning in Q2. (Source: Securities Times)

Anhui province is on track to become the nation's largest car manufacturer this year, Yicai reports, after Q1 output reached 761,700 vehicles, exceeding previous top producer Guangdong by 100,000 units. Feng Lei, director at the Firestone Creative Industry Research Institute, said the change was due to the provinces strong growth in new energy vehicles, as well as changes in statistical methods which saw BYD’s output counted under Anhui and not Guangdong.