MNI China Press Digest June 6: PBOC, Special Bonds, U.S.

Highlights from Chinese press reports on Friday:

• The People's Bank of China will conduct a CNY1 trillion outright reverse repurchase operation on Friday to maintain ample liquidity in the banking system, according to a statement issued on Thursday. Authorities may be addressing a peak in the maturity of interbank certificates of deposit in recent months, said Wang Qing, analyst with Golden Credit Rating, noting a large-scale liquidity injection at the beginning of the month when the funding environment and bond market were operating smoothly was unconventional. The operation has a 91 day term and uses fixed-quantity, interest-rate and multiple-price bidding methods, the announcement said, marking the first time such information has been detailed in advance, after eight consecutive months of such operation, the Economic Information Daily noted.
• China issued CNY1.6 trillion in local government special bonds during the first five months of the year, up 41% on last year, data from the Ministry of Finance and China Bond Information Network showed. According to Enterprise Early Warning data, 30% went towards municipal and industrial park infrastructure, with 20% on transportation, 8% to land reserves, 7% to shantytown renovation, 6% to agriculture and water projects, and 5% to healthcare. Authorities issued CNY779 billion of local government bonds in May, down 14% y/y, taking the total issuance during the first five months to CNY4.3 trillion, up 53% y/y. Sun Jingyuan, head of corporate and institutional business at China Chengxin Credit Rating, attributed last month’s decline to a high-base effect, noting that delayed issuances in early 2024 were released in May, inflating the prior-year comparison. (Source: Yicai)
• China-US relations stand at a critical historical node and are amongst the most important in the world, Vice President Han Zheng told a U.S. delegation at the China-US High-Level Track 2 Dialogue held in Beijing. Han hoped the forum can promote the stable, healthy and sustainable development of China-US relations, Xinhua said. The U.S. side noted China's economic development was admirable and the two sides should strengthen communication and cooperation in areas such as trade and investment.