MNI China Daily Summary: Wednesday, March 26

EXCLUSIVE: China’s upcoming 15th five-year plan, covering the nation’s key goals for 2026-2030, is expected to target an annual GDP increase of circa 4.7%, as productivity gains and greater domestic consumption counterbalances increasing external pressures, a member of the National 14th Five-Year Plan Economic Expert Committee told MNI.

EXCLUSIVE: Beijing could be willing to agree a trade deal with Washington but is likely to baulk at any agreement over currency, even though a stronger yuan would help narrow the economic gap between the two countries, a prominent Chinese economics professor told MNI in an interview.

EXCLUSIVE: Chinese interbank market traders have dialed back expectations for a near-term cut in the central bank’s policy rate as the economy improves and officials reserve policy ammunition in case of external shocks, MNI’s China Money Market Index indicated.

POLICY: China will make further efforts to boost domestic demand, particularly by stimulating consumption as trade barriers are rising across the board, said Huang Yiping, member of MPC of the People’s Bank of China (PBOC), at Boao Asia Forum.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY455.4 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY159.5 billion after offsetting the maturity of CNY295.9 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.9819% from 1.9062%, Wind Information showed. The overnight repo average increased to 1.7843% from 1.7813%.

YUAN: The currency strengthened to 7.2635 to the dollar from 7.2640 on Tuesday. The PBOC set the dollar-yuan central parity rate lower at 7.1754, compared with 7.1788 set on Tuesday. The fixing was estimated at 7.2581 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.8040%, down from Tuesday's close of 1.8125%, according to Wind Information.

STOCKS: The Shanghai Composite Index was down 0.04% to 3,368.70, while the CSI300 index fell 0.33% to 3,919.36. The Hang Seng Index edged up 0.60% at 23,483.32.

FROM THE PRESS: Out of China’s 31 provinces, eight saw positive growth in real-estate investment in the first two months, double from 2024, Yicai.com reported, noting more than 50% saw declines narrowing. Heilongjiang province's property investment grew by 33.5% y/y in the Jan-Feb period, following the 27.3% and 27.9% drop in 2023 and 2024. Yunnan province fell 0.9%, improving from the about 30% drop in the past three years. Nationwide property investment fell 9.8% y/y overall in the first two months, narrowing 0.8 percentage points from 2024.

China’s rapid issuance of new special bonds demonstrates local governments' intention to stimulate market vitality actively, according to Zhang Yiqun, director at the Jilin Provincial Institute of Fiscal Science. The Securities Daily notes the total scale of local government bonds issued reached CNY2.5 trillion by March 25, up 89% y/y, of which newly added special bonds and refinancing special bonds accounted for 31% and 50% respectively.

China’s general budget expenditure reached CNY4.5 trillion during January and February, accounting for 15.2% of the annual spending plan, representing the highest average level for the same period in three years, highlighting the government’s commitment to frontloading fiscal policy in 2025, according to experts interviewed by Xinhua News Agency. Securities transaction stamp tax totalled CNY23 billion, up 58.9% y/y, reflecting the success of market stabilisation measures, according to Luo Zhiheng, chief economist at Yuekai Securities.