MNI China Daily Summary: Monday, October 17

POLICY: China's top economic planning agency, the National Development and Reform Commission, said the economy is recovering and will continue to open up and welcome foreign investment. The NDRC told a 20th Party Congress press conference that economic indicators were showing upward momentum, highlighting "low inflation" and "stable" unemployment. "China’s economy has shown resilience in the face of the Covid and external factors and continues to recover”, Zhao Chenxin, Vice Chairman of the NDRC said.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY2 billion via 7-day reverse repos and CNY500 billion 1-year medium-term lending facilities with the rate unchanged at 2.00% and 2.75%, respectively. The operation led to a net drain of CNY19 billion after offsetting the maturity of CNY21 billion repos and CNY500 MLFs today, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.4647% from 1.4751% on Friday, Wind Information showed. The overnight repo average increased to 1.1439% from the previous 1.1315%.

YUAN: The currency weakened to 7.2050 against the dollar from 7.1931 on Friday. The PBOC set the dollar-yuan central parity rate higher at 7.1095, compared with 7.1088 set on Friday.

BONDS: The yield on 10-year China Government Bond was last at 2.7275%, flat from Friday's close, according to Wind Information.

STOCKS: The Shanghai Composite Index rose 0.42% to 3,084.94, while the CSI300 index edged up 0.10% to 3,846.41. The Hang Seng Index gained 0.15% to 16,612.90.

FROM THE PRESS: The China Securities Regulatory Commission is working on a system to allow foreign investors to trade their positions within six months to facilitate investment in A shares, 21st Century Business Herald reported citing sources from regulatory departments. Currently, if a Chinese fund company which holds more than 5% of a company's stock through multiple fund offerings trades those shares within 6 months, it is not regarded as a short-term transaction, the newspaper said. Eligible foreign public funds are expected to enjoy the same arrangement when the new rules are announced, the newspaper said, adding that the proposed changes are in process.

China will focus on smoothing the domestic cycle of supply and demand to boost economic growth, wrote Zhang Wenkui, researcher at the Development Research Center of the State Council in a commentary published by Caixin after President Xi Jinping's speech at the 20th CPC National Congress on Sunday. Top policymakers have been urged to drive domestic demand by improving people’s livelihood, accelerating the development of service sectors, and increasing the size of the middle class since 2011, but growth still heavily relies on investment and exports with a lower contribution from consumption, wrote Zhang. Maintaining disposable income at a good level is key, Zhang added.

Six major state-owned banks issued statements late Sunday to show their support for the economy after President Xi Jinping’s speech at the 20th CPC National Congress, National Business Daily reported. Bank of China said it will focus on supporting technology, green development, inclusive finance, cross-border business, consumption, wealth management, supply chain and counties. Postal Savings Bank of China said it would boost credit supply in H2, continue to increase the loan-to-deposit ratio and the proportion of credit assets.