MNI China Daily Summary: Tuesday, December 9

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY117.3 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net drain of CNY39.0 billion after offsetting maturities of CNY156.3 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.4512% from 1.4459%, Wind Information showed. The overnight repo average edged down to 1.2984% from 1.3022%.

YUAN: The currency strengthened to 7.0693 against the dollar from the previous 7.0713. The PBOC set the dollar-yuan central parity rate higher at 7.0773, compared with 7.0764 set on Monday. The fixing was estimated at 7.0764 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.8305%, down from the previous close of 1.8308%, according to chinamoney.com.cn. 

STOCKS: The Shanghai Composite Index fell by 0.37% to 3,909.52, while the CSI300 index was down 0.51% at 4,598.22. The Hang Seng Index lost 1.29% at 25,434.23.

FROM THE PRESS: Following the December Politburo meeting, authorities are expected to place greater emphasis on the coordination of fiscal and monetary policies, along with the integration of structural policies and stock revitalisation, according to experts interviewed by Yicai. The approach was likely to combine the strengths of existing and incremental policy adjustments. Beijing’s ultimate goal is to stabilise economic growth while enhancing both quality and efficiency, according to Zhao Wei, chief economist at Shenwan Hongyuan. Wang Qing, chief macro analyst at Dongfang Jincheng, noted that fiscal policy in 2026 will remain proactive with domestic demand taking the lead. Tao Chuan, chief economist at Guolian Minsheng Securities, emphasised that the "cross-cyclical adjustment" of monetary policy could mean that the frequency of interest rate cuts and reserve requirement reductions would decrease relative to a simple counter-cyclical strategy. Consequently, in 2026, monetary policy is expected to rely more heavily on structural tools to address these underlying issues and support sustainable economic growth.

China's retail car sales are unlikely to experience a year-end surge, with November overall sales reaching 2.2 million units—an 8.1% year-on-year decline and a 1.1% month-on-month decrease, Yicai reported. The penetration rate of NEVs in domestic retail reached 59.3% in November, up 7 percentage points compared to the same period last year, setting a new record. The Car Passenger Federation said after the large-scale suspension of subsidies in various places, average daily applications for subsidies in November had dropped to 30,000 vehicles.

China’s unexpected rebound in export growth to 5.9% in November was down to several key factors, including a lower base from the previous year, an overall global trade recovery and notable growth in the export of chips and automobiles, according to Feng Lin, Executive Director of macro research at Dongfang Jincheng. The increases were largely driven by the global AI investment boom and China's ongoing manufacturing transformation, Feng added. Data revealed that exports of integrated circuits and automobiles surged by 34.2% and 53.0% y/y, effectively offsetting the decline in exports of traditional labour-intensive goods such as bags, toys, and clothing—products that were also the primary factors contributing to the drop in China’s exports to the U.S.