MNI China Daily Summary: Thursday, September 18

EXCLUSIVE: China’s Loan Prime Rate is expected to remain unchanged in September, but a deepening economic slowdown increases the likelihood of further easing in Q4, with bond purchases emerging as a possible option, policy advisors and analysts told MNI.

POLICY: Beijing will review TikTok’s technology export and intellectual property licensing in accordance with the law, Ministry of Commerce spokesperson He Yadong said in response to a reporter’s question about President Trump’s remarks that an agreement allowing TikTok to continue operating in the U.S. was reached.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY487 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY195 billion after offsetting maturities of CNY292 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.5566% from 1.5404% on Wednesday, Wind Information showed. The overnight repo average increased to 1.5128% from the previous 1.4867%.

YUAN: The currency weakened to 7.1079 against the dollar, from 7.1056 at Wednesday's close. The PBOC set the dollar-yuan central parity rate higher at 7.1085, compared with 7.1013 set on Wednesday. The fixing was estimated at 7.1101 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.8400%, up from Wednesday's close of 1.8300%, according to Wind Information.

STOCKS: The Shanghai Composite Index lost 1.15% to 3,831.66, while the CSI300 index edged down 1.16% to 4,498.11. The Hang Seng Index was down 1.35% to 26,544.85.

FROM THE PRESS: China’s tax revenue from the securities industry surged by more than 70% in July and August, while the insurance industry growth exceeding 10%, Yicai reported. "These gains helped push total government tax revenue growth above 5% in both months," according to Huang Lixin, director of the Tax Science Research Institute at the State Taxation Administration. Huang said a relatively low base in the same period last year also supported growth. However, the expansion rate could slow down given last year’s fourth-quarter comparatively high levels.

China’s national household consumer loan balance, excluding personal housing loans, reached CNY21 trillion at the end of July, up CNY34.6 billion from the beginning of the year, said Yang Hong, head of the Credit Market Department at the People’s Bank of China. He noted that the loan balance in key service consumption sectors stood at CNY2.8 trillion, representing a 5.3% year-on-year rise. (Source: Yicai)

China has issued CNY1.14 trillion in ultra-long-term special government bonds so far this year, completing 88% of the annual plan, according to Securities Times. Song Xiangqing, vice president at the China Business Economics Association, said this year’s issuance has been characterised by a front-loading and close alignment with project schedules. Under the budget framework, of the planned CNY1.3 trillion in ultra-long-term special government bonds, CNY800 billion will go towards major national projects, while CNY500 billion will support large-scale equipment upgrades and consumer trade-in policies, Securities Times said.