MNI China Daily Summary: Monday, Oct 27

EXCLUSIVE: This week’s expected meeting between Donald Trump and Xi Jinping is likely to provide a short-term fix to their nations’ disputes, with the removal of a 20% U.S. tariff linked to fentanyl and a one-year delay on part of China’s rare earth exports restrictions, but persisting deep disagreements augur further tensions ahead, Chinese policy advisors told MNI.

EXCLUSIVE: China’s domestic retail passenger car market is expected to remain stable in Q4, even as sales growth moderates from the double-digit pace seen earlier this year, a senior automobile industry expert told MNI.

EXCLUSIVE: Beijing’s pivot toward consumption-led growth and industrial upgrading, underpinned by a stable and modestly appreciating yuan, marks a new phase in China’s macroeconomic policy, a prominent economist told MNI, pointing to the latest Five-Year Plan draft’s emphasis on driving economic development through stronger domestic demand.

POLICY: The People’s Bank of China will resume treasury bond trading in the interbank market and continue to implement a moderately loose policy to create a favourable environment for economic recovery and stable financial markets, Governor Pan Gongsheng said on Monday at the opening of the 2025 Financial Street Forum.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY337.3 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY148.3 billion after offsetting maturities of CNY189 billion today, according to Wind Information

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.5818% from 1.4110%, Wind Information showed. The overnight repo average increased to 1.4529% from 1.3221%.

BONDS: The yield on 10-year China Government Bonds was last at 1.7975%, up from the previous close of 1.8454%, according to chinamoney.com.cn.

YUAN: The currency strengthened to 7.1109 against the dollar from 7.1230 on Friday. The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.0881, compared with 7.0928 set on Friday. The fixing was estimated at 7.1145 by Bloomberg survey today.

STOCKS: The Shanghai Composite Index gained 1.18% to 3,996.94 while the CSI300 index increased 1.19% to 4,716.02. The Hang Seng Index edged up 1.05% to 26,433.70.

FROM THE PRESS: China and U.S. delegations have reached basic consensus on arrangements to address their respective trade concerns following two days of talks in Kuala Lumpur, the People’s Daily reported. Both sides will now work out specific details and proceed with their domestic approval processes. Guided by the important consensus reached by the two heads of state in phone conversations earlier this year, officials held candid, in-depth and constructive discussions on several issues. These included U.S. Section 301 measures covering China’s maritime, logistics and shipbuilding sectors, the extension of suspended reciprocal tariffs, fentanyl-related tariffs and law enforcement cooperation, agricultural trade, and export controls, according to the report.

The People’s Bank of China is likely to cut the reserve requirement ratio in Q4 and resume treasury bond trading timely to support growth, prices, and the real-estate market, National Business Daily reported, citing Wang Qing, analyst at Golden Credit Rating. The PBOC is also expected to use outright reverse repos and medium-term lending facilities to continue injecting medium-term liquidity, limiting the potential for market interest rates to rise, Wang said. On Monday, the Bank announced a CNY900 billion one-year MLF operation, leaving October net medium-term liquidity injection at a high level of CNY600 billion, as it seeks to ensure ample liquidity and stabilise bond market sentiment, the report added.

The China Securities Regulatory Commission will focus on strengthening the resilience and risk resistance of the capital market, improving the inclusiveness and adaptability of the market system, and deepening market opening to a higher level, Securities Daily reported. Analysts cited by the newspaper said the regulator will need to step up IPO supervision while enhancing the regular delisting mechanism, improve corporate governance, optimise mergers and acquisitions, restructuring, and equity incentive systems, and promote a stronger sense of responsibility among listed companies.