MNI China Daily Summary: Tuesday, February 3

EXCLUSIVE: China’s electricity demand growth is expected to slow further in 2026 to around 4.5% y/y, as declining consumption in traditional energy-intensive sectors continues to outweigh rising demand from emerging areas such as AI data centres, analysts and a chief economist told MNI.

EXCLUSIVE: Policymakers need to transfer additional state-owned enterprise shares into social security funds to bolster pensions for low-income groups, advisors told MNI, as Beijing explores options to boost incomes and consumption under the 15th Five-Year Plan.

POLICY: Managers at China’s state-owned enterprises' equity market departments must ensure the security of state-owned financial capital by preventing risks and safeguarding the bottom line, Vice Finance Minister Liao Min told officials.

LIQUIDITY: The PBOC conducted CNY105.5 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net drain of CNY296.5 billion after offsetting maturities of CNY402 billion today, according to Wind Information.

RATES: China's seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.4972% from 1.4906%, Wind Information showed. The overnight repo average decreased to 1.3166% from the previous 1.3642%.

YUAN: The currency strengthened to 6.9362 from 6.9513 against the dollar from Monday. The PBOC set the dollar-yuan central parity rate lower at 6.9608, compared with 6.9695 set on Monday. The fixing was estimated at 6.9578 by a Bloomberg survey today.

BONDS: The yield on 10-year China government bonds was last at 1.8070% down from 1.8075% at Monday's close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 1.29% to 4,067.74 while the CSI300 index rose 1.18% to 4,660.11. The Hang Seng Index increased 0.22% to 26,834.77.

FROM THE PRESS: Home sales will likely slow down in February due to the Spring Festival holiday before a potential rebound in March, 21st Century Business Herald reported citing analysts. With prime land parcels in core cities gradually entering the market, coupled with increased promotional efforts, market demand in major cities is expected to be released gradually after the holiday. High-end, upgraded new homes in first- and second-tier cities will continue to attract high-net-worth individuals, while the downward space for prices of many affordable second-hand homes may narrow significantly to help elevate sales, the newspaper said citing analysts.

The key to address strong supply and weak demand lies in shifting more public resources to “invest in people”, namely further improving social security and promoting residents' income growth, said Economic Daily in a commentary. It is necessary to increase income by leveraging taxation and the social security system as well as transfer payments, quickening the formation of an olive-shaped distribution pattern, the newspaper said.

China will establish a basic standard system for the low-altitude economy by 2027, with more than 300 standards by 2030, to support the safe and healthy development of the sector, according to a guideline jointly published by 10 departments. The system will cover five major areas including low-altitude aircraft, infrastructure, air traffic management, safety supervision, and application scenarios, according to China Securities Journal.