MNI China Daily Summary: Wednesday, June 25

EXCLUSIVE: Chinese interbank traders mainly expect the People’s Bank of China to resume government bond purchases in Q3 to support fiscal expansion, according to MNI’s China Money Market Index, which also showed that the interbank liquidity injections increased to offset mid-year fund demand.

POLICY: The PBOC injected a net CNY118 billion into the financial system via its medium-term lending facility (MLF) on Wednesday, aiming to ensure ample liquidity in the interbank market.

POLICY: China is willing to strengthen industrial cooperation and enlarge the pie of cooperation with different countries, Premier Li Qiang told attendees at the opening ceremony of the 2025 Summer Davos Forum in Tianjin, state media Xinhua reported.

LIQUIDITY: The PBOC conducted CNY365.3 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY209 billion after offsetting the maturity of CNY156.3 reverse repo today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.6936% from 1.6684%, Wind Information showed. The overnight repo average increased to 1.3719% from 1.3708%.

YUAN: The currency strengthened to 7.1713 to the dollar from the previous 7.1781. The PBOC set the dollar-yuan central parity rate higher at 7.1668, compared with 7.1756 set on Tuesday. The fixing was estimated at 7.1745 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.6150%, up from the previous close of 1.6100, according to Wind Information.

STOCKS: The Shanghai Composite Index increased 1.03% to 3,455.97, while the CSI300 index gained 1.44% to 3,960.07. The Hang Seng Index rose 1.23% at 24,474.67.

FROM THE PRESS: Frontline staff at real-estate agents in certain cities are hiring actors to pose as prospective high-value homebuyers, according to the Yicai news agency. One agent told Yicai that he personally covers the costs to meet viewing targets and avoid punishment, describing the current conditions as the "toughest period" since he began working. Yicai noted the practice contrasts sharply with conditions in first-tier cities just years ago, when buyers lined up for viewings and agents led multiple groups, underscoring the dramatic shift in supply and demand.

The Ministry of Commerce will promote new energy car sales in rural areas from July to December, offering subsidies up to CNY20,000 for each buyer who replaces a qualified used car with an electric vehicle, Shanghai Securities News reported. The campaign is expected to drive millions of units in EV sales, said Cui Dongshu, secretary-general at the China Passenger Car Association, noting that farmers’ vehicle ownership rate has increased by an average of about 4 percentage points each year in the past few years, demonstrating strong demand potential.

China’s economic growth rate is expected to remain above 5% in the second half of the year, said Huang Yiping, dean at the National School of Development at Peking University. The country’s overall economic activity remains resilient despite ongoing real estate adjustments and external uncertainty. Measures to boost consumption and a more proactive fiscal policy since Q4 last year will lend support, he said. Authorities have room to boost fiscal spending, though the long-term health of government finances should be considered, he added. (Source: Securities Times)