MNI China Daily Summary: Wednesday, August 6

POLICY: China will renovate or build 300,000 kilometres of road nationwide by 2027, aiming to establish a convenient and efficient rural road network, the Ministry of Transport announced.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY138.5 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net drain of CNY170.5 billion after offsetting maturities of CNY309 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.4557% from 1.4445%, Wind Information showed. The overnight repo average increased to 1.3153% from 1.3143%.

YUAN: The currency weakened to 7.1900 to the dollar from 7.1876 on Tuesday. The PBOC set the dollar-yuan central parity rate higher at 7.1409, compared with 7.1366 set on Tuesday. The fixing was estimated at 7.1830 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.6980%, down from Tuesday's close of 1.7030%, according to chinamoney.com.cn.

STOCKS: The Shanghai Composite Index was up 0.45% to 3,633.99, while the CSI300 index edged up 0.24% to 4,113.49. The Hang Seng Index gained 0.03% at 24,910.63.

FROM THE PRESS: Public kindergarten students will have 100% of final-year fees waived from September semester 2025 onwards, while children at private pre-schools will see reduced fees, the State Council announced. Less developed provinces such as Inner Mongolia, Gansu and Qinghai will bear 20% of the cost, while economically advanced regions will shoulder between 40% and 50%. According to Ministry of Education data, in 2024 China had 253,300 kindergartens, with 35.8 million children enrolled. Among them, children in public institutions totalled 32.8 million, accounting for 91% of the total.

Provinces such as Guangdong and Ningxia are taking steps to tackle involuted competition in the banking sector, Yicai.com reports. Industry insiders noted measures go beyond merely halting rebates, with a broad and determined effort to eliminate harmful, low-level competition across mortgages, consumer loans and wealth management. An insider said that commission rebate, also known as order-snatching, is a grey area, where banks secretly pay commission or cash rebates to intermediaries or personal client managers in exchange for directing clients to apply for mortgages or consumer loans with their bank.

Authorities have approved the merger of China Shipbuilding and China Heavy Industry, with analysts expecting more CNY100 billion SOE mergers on the way, Yicai.com reports, noting China Shenhua, a state-owned coal mining and energy company, also recently announced plans to acquire assets held by the State Energy Group. Industrial integration has accelerated since the introduction of new rules in September 2024, allowing for the transformation and upgrading of traditional sectors, an industry insider said.