Everything You Need to Know About China's Economy on Monay (July 22)
Your Daily & Trustworthy Updates on the Chinese Economy
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Good Monday! This is TIAN in Shandong in east China for summer vacation.
Welcome to monitor the pulse of China's economy together with me.
DRIVING THE DAY, China's central bank lowered the interest rates on its standing lending facility (SLF).
According to the People's Bank of China, the overnight rate was cut by 10 basis points to 2.55 percent, and the seven-day and one-month rates were each lowered by 10 basis points to 2.7 percent and 3.05 percent, respectively.
The SLF, introduced by the central bank early in 2013, serves as a channel to meet the liquidity needs of financial institutions. These institutions can take out SLF loans from the central bank, using qualified bonds and other credit assets as collateral.
Earlier on Monday, the central bank lowered the interest rate on seven-day reverse repos, a key short-term policy rate, from 1.8 percent to 1.7 percent amid efforts to strengthen counter-cyclical adjustments and better support the real economy.
China also cut the market-based benchmark lending rate on Monday, which aligned with market expectations as authorities stepped up monetary support to shore up the economy.
The one-year loan prime rate (LPR) was 3.35 percent on Monday, down from the previous reading of 3.45 percent, according to the National Interbank Funding Center.
The over-five-year LPR, on which many lenders base their mortgage rates, was lowered by 10 basis points to 3.85 percent.
FYI: China has a short-term policy interest rate, similar to the open market operations rate. This is similar to practices in developed economies, where central banks primarily focus on short-term interest rates. Additionally, China adopts a mid-term policy interest rate.
The monetary policy transmission mechanism refers to the process by which monetary policy decisions affect economic growth, prices, and other aspects of the economy. The official interest rate is the most popular tool by which central banks influence the economy.
ALSO ON MONDAY, China's Ministry of Commerce announced that it will launch an expiry review of anti-dumping measures aimed at stainless steel billets and hot-rolled stainless steel plates and coils imported from the European Union (EU), the United Kingdom (UK), the Republic of Korea (ROK) and Indonesia starting from July 23, 2024.
China imposed anti-dumping duties on stainless steel products imported from the EU, Japan, the ROK, and Indonesia starting from July 23, 2019, with rates ranging from 18.1 to 103.1 percent for five years, according to a statement from the ministry.
Starting from July 23, 2024, the anti-dumping measures aimed at imports of stainless steel billets as well as hot-rolled stainless steel plates and coils originating from Japan will be terminated upon expiration, the statement said.
Stainless steel billets and hot-rolled stainless steel plates and coils are widely used in industries such as ships, containers, railways, electric power, petroleum and petrochemicals.
MEANWHILE, China's box office revenue for the 2024 summer movie season, which runs from June 1 to Aug. 31, had exceeded 6 billion yuan (about 841 million U.S. dollars) as of Monday noon, with three domestic films topping the box office chart.
According to film data platform Beacon, the comedy "Successor," featuring renowned comedic duo Shen Teng and Ma Li, leads the chart. The film, released on July 16, tells the story of a wealthy couple who fakes a challenging environment for their son to foster his personal growth. By Monday noon, it had raked in over 1.58 billion yuan, accounting for 26.4 percent of the total box office sales.
Ranking second is the crime thriller "A Place Called Silence." The film, which delves into the topic of campus bullying, debuted on July 3 and had grossed nearly 1.12 billion yuan as of Monday noon.
The drama "Moments We Shared," released on June 22, secured the third spot in the seasonal rankings with approximately 496.5 million yuan in box office earnings.
The summer moviegoing period is the longest single screening season on the Chinese mainland. In 2023, the summer box office totaled 20.6 billion yuan.
IN TODAY'S FINANCIAL MARKET,
Shanghai Composite Index Fell 0.61% on Monday
China’s benchmark Shanghai Composite Index (000001.SH) lost 0.61% on Monday, while the Shenzhen Component Index (399001.SZ) fell 0.38%.
Shanghai’s tech-heavy STAR 50 Index (000688.SH) gained 0.34% for the day, while Shenzhen’s similar ChiNext Index (399006.SZ) fell 0.09%.
China's benchmark interbank gold prices lower Monday
According to the China Foreign Exchange Trade System, the benchmark price for gold that is 99.95 percent pure or above stood at 562.77 yuan (about 78.9 U.S. dollars) per gram, 9.48 yuan lower than the previous trading day.
The price for gold that is 99.99 percent pure or above went down 15.66 yuan from the previous trading day to 561.9 yuan.
Chinese yuan weakens to 7.1335 against USD Monday
The central parity rate of the Chinese currency renminbi, or the yuan, weakened 20 pips to 7.1335 against the U.S. dollar Monday, according to the China Foreign Exchange Trade System.
In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.
Hong Kong's Hang Seng Index closes 1.25 pct higher
Hong Kong's stock market ended higher on Monday with the benchmark Hang Seng Index up 1.25 percent to close at 17,635.88 points.
The Hang Seng China Enterprises Index gained 1.44 percent to end at 6,253.94 points, and the Hang Seng Tech Index jumped 2.1 percent to close at 3,610.71 points.
AT THE END OF TODAY'S SHARING, LET'S TAKE A LOOK AT YOUR DAILY FUTURES:
Cotton futures closed lower Monday in daytime trading on the Zhengzhou Commodity Exchange (ZCE).
The most active cotton contract for September 2024 delivery lost 80 yuan (about 11.21 U.S. dollars) to close at 14,615 yuan per tonne.
On Monday, the total trading volume for six listed cotton futures contracts on the ZCE was 376,047 lots with a turnover of 27.51 billion yuan.
Sugar futures closed lower Monday in daytime trading on the Zhengzhou Commodity Exchange.
The most active sugar contract for September 2024 delivery lost 18 yuan (2.52 U.S. dollars) to close at 6,104 yuan per tonne.
On Monday, the total trading volume for six listed sugar futures contracts on the ZCE was 320,757 lots with a turnover of 19.37 billion yuan.
Iron ore futures closed lower on Monday in daytime trading at the Dalian Commodity Exchange.
The most active iron ore contract for September 2024 delivery dipped 2.5 yuan (about 35 U.S. cents) to close at 798.5 yuan per tonne.
On Monday, the total trading volume of 12 listed iron ore futures contracts on the exchange was 423,139 lots, with a turnover of about 33.58 billion yuan.
No.1 soybean futures closed higher on Monday in daytime trading at the Dalian Commodity Exchange.
The most active No.1 soybean contract for September 2024 delivery gained 12 yuan (about 1.68 U.S. dollars) to close at 4,524 yuan per tonne.
On Monday, the total trading volume of six listed No.1 soybean futures contracts on the exchange was 97,958 lots, with a turnover of about 4.4 billion yuan.
About the Newsletter:
Ran by TIAN Dongdong, this newsletter features daily, trustworthy content on China's economy and regularly updates the insights of Chinese youth on Sino-US relations. Having worked in Brussels, London, Cairo, and Tripoli for Chinese media as correspondent for several years, TIAN is now based in Beijing.
I'll have to check those movies out!