MNI China Daily Summary: Thursday, October 30

EXCLUSIVE: China is expected to intensify efforts to expand the yuan’s role in global commodity pricing and settlement during the 15th Five-Year Plan period, as part of a broader strategy to gain greater influence over key commodity prices and address profit imbalances between foreign resource producers and domestic consumers, a government advisor told MNI.

EXCLUSIVE: China’s GDP growth could slow to between 2-4% over the next decade unless it abandons its state-led growth model, while trade tensions with major economies are likely to intensify as excess industrial capacity spills into external markets, a prominent economist told MNI, warning Beijing may have already missed the optimal reform window.

POLICY: The U.S. has agreed to remove a 10% fentanyl tariff imposed on Chinese goods, while its 24% reciprocal tariff will continue to be suspended for one year, a spokesperson for China’s Ministry of Commerce said on Thursday, answering a reporter's question on the joint arrangement reached between China and the U.S. during the Kuala Lumpur economic and trade consultations this week.

POLICY: Chinese President Xi Jinping has emphasised that China's development and revitalisation goes hand-in-hand with President Trump's vision to “Make America Great Again", during the two leaders meeting in South Korea on Thursday, a readout from the Ministry of Foreign Affairs showed.

LIQUIDITY: The PBOC conducted CNY342.6 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY130.1 billion after offsetting maturities of CNY212.5 billion today, according to Wind Information

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.5018% from 1.5452% previously, Wind Information showed. The overnight repo average was at 1.3115%, down from the previous 1.4045%.

YUAN: The currency weakened to 7.1107 against the dollar from the previous 7.0991. The PBOC set the dollar-yuan central parity rate higher at 7.0864, compared with 7.0843 set on Wednesday. The fixing was estimated at 7.1065 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.8025%, down from the previous close of 1.8115%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.73% to 3,986.90, while the CSI300 index decreased 0.80% to 4,709.91. The Hang Seng Index dropped 0.24% to 26,282.69.

FROM THE PRESS: China must combine efforts to improve people’s livelihoods with expanding domestic demand and cultivating new growth momentum through better social welfare, Premier Li Qiang wrote in an article published by People’s Daily. Authorities should prioritise employment and implement plans to boost household incomes, while optimising income distribution by accelerating wage growth for low-income earners and expanding the middle-income group, Li said. He added that a series of balanced and accessible policies should be introduced to address issues related to employment, social security, education, healthcare, elderly care and childcare.

Beijing will maintain the stability and continuity of proactive fiscal policies to support its goal of keeping economic growth within a reasonable range during the upcoming 15th Five-Year Plan period, Yicai.com reported. The proposal of the five-year plan released this week proposed “leveraging the role of proactive fiscal policy and enhancing fiscal sustainability”, which reflects the urgent need for counter-cyclical adjustments including expanding fiscal spending and subsidising consumption to stabilise economic fundamentals, while standardising debt management and optimising government spending structure to ensure fiscal sustainability, the newspaper said citing Liu Rong, professor at Southwestern University of Finance and Economics.

The total value of social logistics reached CNY263.2 trillion for the first three quarters, an increase of 5.4% y/y, decelerating by 0.3 percentage points from H1, Securities Daily reported citing data by China Logistics Information Center. On a quarterly basis, the figure showed a slight downward trend of 5.7%, 5.5% and 5.2% from Q1 to Q3, but Meng Yuan, head of logistics information at CLIC, expects logistics demand to stabilise and rebound in Q4 with the arrival of the traditional peak season for shipping and e-commerce express, the newspaper said.