MNI China Daily Summary: Wednesday, June 18

EXCLUSIVE: China’s Loan Prime Rate (LPR) is expected to remain unchanged this month following a 10-basis-point cut in May, as the central bank opts for a moderate approach in rate reduction through the rest of the year while ensuring ample interbank liquidity to support credit demand and government bond issuance.

POLICY: The People’s Bank of China (PBOC) Governor Pan Gongsheng announced new measures to liberalise cross-border trade and investment, expand overseas financing, and further refine the central bank’s policy framework. 

POLICY: The international monetary system is evolving toward a multipolar structure where several major sovereign currencies will coexist, and the International Monetary Fund's Special Drawing Rights (SDR) could emerge as a leading international currency, PBOC Governor Pan said at the 2025 Lujiazui Forum.

POLICY: China’s foreign exchange market will remain stable, with the yuan operating at a “reasonably balanced level,” said Zhu Hexin, head of the State Administration of Foreign Exchange, adding that a new round of investment quotas under the Qualified Domestic Institutional Investor (QDII) scheme will be granted to meet demand for overseas investment.

POLICY: China will support foreign-funded companies to participate in more pilots of financial business in the country, especially in exclusive pension insurance and commercial pensions, said Li Yunze, director of the National Administration of Financial Regulation.

POLICY: China will further deepen reform of its Science and Technology Innovation Board to support the financing of tech companies better, according to Wu Qing, chairman of China Securities Regulatory Commission.

LIQUIDITY: The PBOC conducted CNY156.3 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net drain of CNY7.7 billion after offsetting the maturity of CNY164 reverse repo today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.5267% from 1.5227%, Wind Information showed. The overnight repo average decreased to 1.3706% from 1.3710%.

YUAN: The currency weakened to 7.1868 to the dollar from 7.1838 on Tuesday. The PBOC set the dollar-yuan central parity rate higher at 7.1761, compared with 7.1746 set on Tuesday. The fixing was estimated at 7.2001 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.6375%, up from Tuesday's close of 1.6330%, according to Wind Information.

STOCKS: The Shanghai Composite Index was up 0.04% to 3,388.81, while the CSI300 index gained 0.12% to 3,874.97. The Hang Seng Index lost 1.12% at 23,710.69.

FROM THE PRESS: Government officials cannot host illegal banqueting under the excuse of revitalising the economy, the People’s Daily said in a commentary. Rules banning illegal eating and drinking are to prevent corruption and allow the economy to develop better, the paper said. Normal catering practices are the pulse of the economy with revenue exceeding CNY5.5 trillion in 2024 and supporting more than 30 million jobs, the paper added. Non-compliant dinners are eroding public trust and must be eradicated with a zero-tolerance attitude.

More than 70% of enterprises expect cross-border e-commerce imports and exports to be stable or grow in 2025, a Chinese customs survey has shown, following 2024’s trade reaching CNY2.7 trillion, up 14% y/y and 9 percentage points higher than the country's overall goods trade. In addition to diversifying markets, firms are developing overseas warehouse services to reduce the impact of tariff policy fluctuations, insiders said. (Source: Yicai)

Local governments are increasingly resolving overdue corporate accounts using fiscal funds and special bonds, Securities Times reported. As of June 17, local governments had reserved CNY55.6 billion of special bonds for such purposes, according to the newspaper’s calculation. Certain places, including Yunnan and Hunan province, have increased their special-bond quota within the debt limit to supplement government funds mainly towards resolving overdue accounts owed to enterprises, the newspaper said.