MNI China Daily Summary: Wednesday, June 11

POLICY: Chinese authorities hope local governments, overseas business organisations and enterprises will do a good job implementing free trade agreements and promote the high-quality development of foreign trade, Li Chenggang, international trade negotiation representative and vice minister of the Ministry of Commerce said.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY164 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net drain of CNY50.9 billion after offsetting the maturity of CNY214.9 reverse repo today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.5276% from 1.5063%, Wind Information showed. The overnight repo average increased to 1.3679% from 1.3631%.

YUAN: The currency strengthened to 7.1858 to the dollar from the previous 7.1869. The PBOC set the dollar-yuan central parity rate lower at 7.1815, compared with 7.1840 set on Tuesday. The fixing was estimated at 7.1815 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.6120%, down from the previous close of 1.6175, according to Wind Information.

STOCKS: The Shanghai Composite Index increased 0.52% to 3,402.32, while the CSI300 index gained 0.75% to 3,894.63. The Hang Seng Index rose 0.84% at 24,366.94.

FROM THE PRESS: China and the U.S. have reached a framework in principle for implementing the consensus agreed at the Geneva talks and June 5 heads of state call, said Li Chenggang, international trade negotiator and vice minister of commerce. Li said communication in London was professional, rational, in-depth and candid. (Source: China News Service)

China’s old-for-new subsidy policy has been suspended or limited in some areas such as Chongqing and Guangzhou, in the lead-up to the June 18 mid-year shopping festival, according to Yicai, which cited information obtained from multiple sources. Industry insiders said authorities want a phased supply of funds and are concerned over excessive low-prices. A senior person in the home appliance industry said the suspension or restrictions came after the scheme exceeded expectations. Another insider said consumers may delay buying until authorities restore the programme.

China should direct more investment towards consumption to promote corporate innovation, industrial upgrading and release consumer spending, according to Xu Mingzhi, assistant economics professor at Peking University. Xu argued investment can complement consumption to cultivate new market demand and spending scenarios, noting that aging social services and personalised health management have large potential. (Source: Yicai.com)