MNI China Daily Summary: Tuesday, April 29

EXCLUSIVE: Demand for the yuan in Asia and Belt and Road Initiative (BRI) countries is likely to rise as the U.S. dollar-dominated monetary system declines and the world moves toward a system of regional reserve currencies, requiring China’s central bank to further liberalise the capital account and open its financial markets, a prominent Chinese economist told MNI.

EXCLUSIVE: China faces a more urgent need than ever to expand domestic demand, which is necessary to rebalance both the Chinese and world economies and could provide an opportunity to displace the U.S. as the world’s leading consumption market if it is accompanied by further economic opening, a prominent economist told MNI in an interview.

EXCLUSIVE: China will need to provide additional support for regions and sectors most dependent on U.S. trade, as efforts currently focused on redirecting sales to the domestic markets will be met with insufficient demand, advisors and analysts told MNI, adding that what exporters really need is lower U.S. tariffs.

POLICY: Hong Kong’s securities watchdog said it will provide appropriate guidance and assistance for Chinese companies listed overseas should they wish to return and list in Hong Kong, according to a report by the Securities Times.

POLICY: Chinese airlines and Boeing have both suffered from the impact of U.S. tariffs, China’s Ministry of Commerce said, responding to a journalist's question on reports the Seattle based manufacturer flew back three aircraft originally earmarked for Chinese carriers.

POLICY: China’s National Development and Reform Commission has issued CNY81 billion of ultra-long-term special treasury bond funds to local governments, the second batch so far this year, in support of the old-for-new consumer goods programme, the central planner said.

LIQUIDITY: The PBOC conducted CNY340.5 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY120 billion after offsetting the maturities of CNY220.5 billion reverse repos today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.7824% from the previous 1.7489%, Wind Information showed. The overnight repo average decreased to 1.5378% from 1.5888%.

YUAN: The currency strengthened to 7.2653 against the dollar from the previous 7.2995. The PBOC set the dollar-yuan central parity rate lower at 7.2029, compared with 7.2043 set on Monday. The fixing was estimated at 7.2803 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.6250%, up from the previous close of 1.6500%, according to chinamoney.com.cn.

STOCKS: The Shanghai Composite Index was down 0.05% to 3,286.65, while the CSI300 index fell 0.17% to 3,775.08. The Hang Seng Index rose 0.1% at 22,008.11.

FROM THE PRESS: Authorities' support for the A-share market together with China’s low interest-rate environment could drive up stock prices in the long run, said Wu Zhaoyin, chief investment officer at Soochow Futures. In the near term, major indexes may fluctuate as firms release annual and quarterly reports, and U.S. tariffs could be adjusted during the May 1-5 holiday period when the exchanges are closed, said Wu, noting impacts can be controlled.

Lawmakers have recommended the draft private sector promotion law be passed during the current session of the NPC Standing Committee, Xinhua news agency has reported, adding that officials called for authorities to unveil concrete measures to ensure its adoption. The legislation will establish the legal status of the private economy for the first time, allowing China to promote sustainable and high-quality development in the private economy, Xinhua noted. The Standing Committee of the 14th NPC began its four-day 15th session on Sunday in Beijing. (Source: Xinhua)

Shenzhen city will incentivise enterprises to boost domestic sales by offering a CNY500,000 reward for every CNY100 million increase in retail sales, up to a maximum of CNY10 million, Yicai.com reported.  In response to rising foreign trade pressure, the municipal government launched 10 measures with the highest single reward reaching up to CNY25 million, including supporting firms to participate in the consumer trade-in scheme and expanding online retail, the newspaper said.