MNI China Daily Summary: Wednesday, July 30

EXCLUSIVE: The People’s Bank of China looks set to restart Pledged Supplementary Lending to boost investment as economic headwinds rise in the second half of the year, but it will keep its key policy rate unchanged, according to the latest MNI China Money Market Index survey.

POLICY: Chinese authorities should enhance the attractiveness of domestic capital markets and consolidate the recent positive momentum, according to China's top leaders at the communist party's July Politburo meeting, state media reported.

POLICY: China will further enhance its proactive fiscal stance and moderately loose monetary policy to unlock existing policy effects fully, while stepping up intensity when needed, according to Xinhua News Agency following Wednesday’s Politburo meeting.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY309 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY158.5 billion after offsetting maturities of CNY150.5 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.5176% from 1.5643%, Wind Information showed. The overnight repo average decreased to 1.3153% from 1.3633%.

YUAN: The currency weakened to 7.1823 to the dollar from the previous 7.1765. The PBOC set the dollar-yuan central parity rate lower at 7.1441, compared with 7.1511 set on Tuesday. The fixing was estimated at 7.1736 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.7000%, down from the previous close of 1.72000, according to Wind Information.

STOCKS: The Shanghai Composite Index increased 0.17% to 3,615.72, while the CSI300 index fell 0.02% to 4,151.24. The Hang Seng Index decreased 1.36% at 25,176.93.

FROM THE PRESS: Beijing and Washington have agreed to promote the suspension of U.S. reciprocal tariffs and China's countermeasures for an additional 90 days, the Ministry of Commerce has announced, following both sides’ meeting in Stockholm, Sweden. The ministry described the talks as candid, in-depth and constructive exchanges on economic and trade issues of mutual concern. Vice Premier of the State Council, He Lifeng, said both sides should continue to implement the important consensus from the heads-of-state call, make full use of the China-U.S. economic and trade consultation mechanism and continually build consensus.

China should intensify its counter-cyclical fiscal adjustments by accelerating the issuance and deployment of ultra-long-term special treasury bonds and local government special bonds, Finance Minister Lan Fo’an wrote in an article published in Study Times, a publication affiliated with the Communist Party. To stimulate domestic demand, the government should enhance consumer and services-sector spending by providing interest subsidies on loans to households and service-oriented businesses, the article stated, adding that authorities need to improve the supervision of local special bond funds and promote the establishment of a debt repayment reserve system.

Senior leaders from China and the U.S. have held in-depth exchanges on each other's macroeconomic policies and reviewed the consensus and framework reached in Geneva and London, Xinhua News Agency reported, citing Li Chenggang, China international trade representative and vice minister of commerce. Li, speaking after the conclusion of this week’s Stockholm talks, said the two sides appreciated the importance of safeguarding stable and sound China-U.S. economic ties.