MNI China Daily Summary: Thursday, August 21

EXCLUSIVE: China’s total steel demand is expected to weaken in the second half of 2025 as export growth declines from an 11.4% year-to-date rise and domestic consumption remains weak, local analysts told MNI. 

LIQUIDITY: The People's Bank of China conducted CNY253 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 CNY128.7 billion, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.5140% from 1.5680% previously, Wind Information showed. The overnight repo average decreased to 1.4639% from 1.4738%. 

YUAN: The currency strengthened to 7.1778 against the dollar from 7.1793. The PBOC set the dollar-yuan central parity rate lower at 7.1287, compared with 7.1384  on Wednesday. The fixing was estimated at 7.1773 by Bloomberg survey today. 

BONDS: The yield on 10-year China Government Bonds was last at 1.7650%, down from the previous close of 1.7800%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.13% to 3,771.10, while the CSI300 index increased 0.39% to 4,288.07. The Hang Seng Index lost 0.24% to 25,104.61.

FROM THE PRESS: Primary school teachers in several regions across China are being redeployed to junior and middle schools as demographic shifts reshape education demand. The Ministry of Education’s National Statistical Bulletin showed that in 2024, national primary school enrolment fell to 16.1 million, down 2.6 million from the previous year. In contrast, junior high school enrolment rose to 18.4 million, an increase of 941,200. Chen Zhiwen, a member of the Academic Committee of the China Society for Education Development Strategy, noted that shifting demographics will create teacher surpluses and shortages across primary, junior high, and high schools. (Source: Yicai)

China's financial assets such as equities and funds can become the dominant component of household wealth, surpassing traditional asset classes, if the stock market exceeds CNY300 trillion by 2030, up from around CNY100 trillion as of August 2025, according to Teng Tai, president of the Wanbo New Economy Research Institute. Government and state-owned enterprises must scale back inefficient and unproductive investments in order to create more space for private capital, Teng added. (Source: Yicai)

China’s investment activity is expected to regain momentum, despite the recent slowdown in nominal investment growth, as short-term pressures ease and the impact of pro-investment policies take effect, according to Wang Qing, chief macro analyst at Dongfang Jincheng. Zhu Hualei, senior investment consultant at Shaanxi Jufeng Investment Information, emphasised the need to accelerate large-scale initiatives already planned or under construction, ensuring completion as early as possible. (Source: Securities Daily)