MNI China Daily Summary: Wednesday, Feb 21

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY49 billion via 7-day reverse repo and on Wednesday, with the rates unchanged at 1.80%. The reverse repo operation has led to a net drain of CNY347 billion reverse repos after offsetting CNY396 billion maturity today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.8275% from 1.8060%, Wind Information showed. The overnight repo average increased to 1.6940% from 1.6268%.

YUAN: The currency strengthened to 7.1887 to the dollar from 7.1976 on Tuesday. The PBOC set the dollar-yuan central parity rate lower at 7.1030 on Wednesday, compared with 7.1068 set on Tuesday.

BONDS: The yield on 10-year China Government Bonds was last at 2.4100%, up from Tuesday's close of 2.4225%, according to Wind Information.

STOCKS: The Shanghai Composite Index increased 0.97% to 2,950.96 while the CSI300 index rose 1.35% to 3,456.87. The Hang Seng Index increased 1.57% at 16,503.10.

FROM THE PRESS: China must reform its economy to stabilise exports while expanding household income as a percentage of GDP, according to Liu Xinghua, director of the China National Innovation and Development Strategy Research Association. China was entering a crucial seven years where it must maintain reasonable economic growth to achieve Beijing's high quality development goals. Liu said working class people would benefit from a better income distribution system and reduced tax burden. Officials need to improve basic guarantees in housing, medical, elderly care, and education. Liu expected the national growth target in 2024 at around 5% despite the 31 provinces setting their weighted average GDP target at 5.4%.

China’s efforts to improve developer financing has made progress, with 214 cities issuing "white lists" of real estate projects eligible for financing support covering 5,349 projects, according to the Ministry of Housing and Urban-Rural Development. The move follows authorities' announcement in January of the urban real-estate financing coordination mechanism. In future, commercial banks must report white-list projects they rejected support for to the authorities, and relevant parties must work together to resolve outstanding issues.

China Securities Regulatory Commission Chairman Wu Qing focused on stabilising market confidence and promoting long term systems at the regulator's recent symposium, according to experts in attendance. Peng Wensheng, chief economist at the CICC Research Institute, said attendees agreed the market registration system needed reform to protect small and medium investors better and strengthen anti-fraud supervision. Wu Xiaoqiu, dean of the China Capital Market Research Institute, also in attendance, noted the central bank must take measures to stabilise the capital market as regulators have the tools but no funds.