MNI China Daily Summary: Tuesday, Dec 3

EXCLUSIVE: China will likely increase support for consumer trade-ins via additional special treasury bonds next year, while providing low-income groups subsidies to boost domestic demand given uncertainty over global trade in 2025, advisors and analysts told MNI.

POLICY: UK businesses in China continue to find market conditions difficult, according to the British Chamber of Commerce in China, with the Chamber’s 2024-25 sentiment survey showing 58% of members faced tougher operations than last year, down from 60% in 2023’s report.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY51.3 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY248 billion after offsetting the maturity of CNY299.3 billion today, according to Wind Information.

RATES: China's seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.6057% from 1.6054%, Wind Information showed. The overnight repo average decreased to 1.3363% from the previous 1.4119%.

YUAN: The currency weakened to 7.2791 against 7.2706 at Monday's close. The PBOC set the dollar-yuan central parity rate higher at 7.1996, compared with 7.1865 set on Monday. The fixing was estimated at 7.2691 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.9150%, up from Monday's 1.9100%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.44% to 3,378.81 while the CSI300 index rose 0.11% to 3,951.89. The Hang Seng Index was up 1.00% to 19,746.32.

FROM THE PRESS: The People’s Bank of China will keep monetary policy supportive in 2025, while increasing countercyclical regulation, maintaining reasonable liquidity and reducing financing costs for enterprises and residents, Governor Pan Gongsheng said at a recent forum. The central bank will use structural monetary policy tools, strengthen support for scientific and technological innovation, green and consumer finance, and promote the stable development of the real estate and capital market, Pan added. Since late September, authorities have implemented incremental policies aimed at reaching this year's expected economic goals.

Analysts expect China’s November CPI to grow moderately, ranging from 0.15% to 0.6% y/y, compared to October’s 0.3%, Securities Daily reported. Declining food prices amid better weather and supply, falling prices of crude oil, industrial raw materials, metals and other commodities will weigh down CPI, the newspaper said citing analysts. Sources predicted PPI in November would be between -2.09% to -3.0% y/y, compared to October’s -2.9%, given low ex-factory and raw material purchase prices sub-indices in the recent manufacturing PMI, and affected by weak global oil demand, the daily said, citing analysts. China is set to release the data next Monday.

The People's Bank of China will align with other central banks to include residential demand deposits and prepaid funds received by non-bank payment institutions into M1 calculations, starting in 2025, Xinhua News Agency reported. Given recent payment method developments, individuals can now use personal demand deposits for payment and transfer at any time without withdrawing cash. These deposits now have the same liquidity as corporate demand deposits and should therefore be included in M1, Xinhua reported, citing PBOC officials.