MNI China Daily Summary: Tuesday, December 30

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY312.5 billion via seven-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY253.2 billion after offsetting maturities of CNY59.3 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.6874% from 1.5944%, Wind Information showed. The overnight repo average fell to 1.2395% from 1.2417%.

YUAN: The currency strengthened to 6.9901 against the dollar from the previous 7.0098. The PBOC set the dollar-yuan central parity rate higher at 7.0348, compared with 7.0331 set on Monday. The fixing was estimated at 7.0136 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.8475%, down from the previous close of 1.8575%, according to chinamoney.com.cn.

STOCKS: The Shanghai Composite Index closed virtually unchanged at 3,965.12, while the CSI300 index was up 0.26% at 4,651.28. The Hang Seng Index gained 0.86% at 25,854.60.

FROM THE PRESS: The Ministry of Finance will boost overall expenditure to maintain the intensity of spending in 2026, in line with the goals of stabilisng economic growth and boosting domestic demand, according to an editorial by 21st Century Business Herald. The ministry will keep allocating funds to support the consumer trade-in scheme, and expand subsidies to smart products, digital devices, green building materials and even some services consumption, the newspaper said. The scale of ultra-long-term special treasury bonds may be increased to match the long-term investment needs of national projects, primarily supporting cutting-edge technologies and advanced manufacturing, the Herald said.

Authorities must pay more attention to revitalising existing assets, by optimising asset management and project operation capabilities as well as eliminating those with negative cash flow, said Chen Daofu, deputy director of the Institute of Finance at the Development Research Centre of the State Council. Meanwhile, it is necessary to promote market-oriented reforms of public utilities such as water, electricity, gas, and public transportation to improve the return on resources, said Chen, noting that this should be combined with reasonable subsidies to ensure the welfare of low-income groups. (Source: 21st Century Business Herald)

Social logistic spending in China reached CNY331.2 trillion in the first eleven months, representing an increase of 5.0% y/y, Jiemian.com reported, citing data by China Federation of Logistics and Purchasing. The total value of goods and services transported by business and consumers rose by 5.8% y/y, with the rapid growth of instant retail and live-streaming e-commerce driving a boom in emerging consumer logistics. 

China announced new subsidies to boost consumption and equipment renewal in a bid to shore up domestic demand, according to a statement by the National Development and Reform Commission on Tuesday.  The first batch of CNY62.5 billion in funds has already been launched, according to Xinhua. Authorities will subsidise vehicle replacement with new energy passenger and renewal with 8% of the price (capped at CNY15,000), while up to 12% of a vehicle price will be paid for scrapping. (See Consumers purchasing six categories of home appliance, including refrigerators, washing machines, televisions, air conditioners, computers, and water heaters, and four categories of other products, including phones, tablets, smartwatches and bands, and smart glasses, will receive a subsidy of 15% of the sales price.