Everything You Need to Know About China's Economy on Monday (Aug. 26)

Your Daily & Trustworthy Updates on the Chinese Economy

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Good Monday! This is TIAN in Beijing.

Welcome to monitor the pulse of China's economy together with me.

DRIVING THE DAY, China Starts Stress Testing Banks to Avoid Stampede Out of Bonds, Bloomberg reported.

• China has initiated stress tests with financial institutions on their bond investments, to make sure they can handle any market volatility should a record-breaking rally reverse, according to state-run media. 

• The People’s Bank of China (PBOC) has made a gradual start to the tests recently, wary that a bull run might lead to one-sided bets in long-term government bonds, according to a front-page report by Financial News. Its intention may not necessarily be to significantly push yields higher, the central bank-backed newspaper said citing an unidentified source.

ALSO ON MONDAY, China has seen 802 million railway passenger trips between July 1, the start of the summer travel rush, and August 25, data from the China State Railway Group Co., Ltd. showed Monday.

• The company said the figure marks an increase of 6.2 percent from the same period last year. It added that the average daily number of railway passenger trips reached nearly 14.33 million during the period.

• The demand for student travel during summer vacation, tourism and family visits is strong, keeping railway passenger flow at a high level, according to the company.

MEANWHILE, Chinese researchers have created a new cathode material to increase the cycle-life of all-solid-state lithium batteries, potentially improving their viability for commercial applications. The research was recently published in the journal Nature Energy.

•  The research team from Qingdao Institute of Bioenergy and Bioprocess Technology (QIBEBT), Chinese Academy of Sciences, said that all-solid-state lithium batteries using solid electrolytes are less likely to leak and burn than conventional liquid lithium-ion batteries, which are widely used in electric vehicles, mobile phones and computers.

• The new creation empowered all-solid-state lithium batteries with high conductivity, high specific discharge capacity, small volume change, high energy density, and long cycle life compared with previous solid lithium batteries.

• This new homogeneous cathode material, which will enable solid lithium batteries to have higher safety and superior performance, has not yet been named.

• The new material achieves over 1,000 times the electronic and ionic conductivity of traditional battery cathode materials. It can smoothly undergo charge and discharge cycles without conductive additives, which simplifies the battery preparation process and also improves the performance of the all-solid-state lithium battery.

• The new material's 1.2 percent volume change during charge and discharge is more conducive to maintaining the stability of the battery structure than the traditional material, which has a volume change of over 2.6 percent. Even after 5,000 charge and discharge cycles, the new material battery still retains 80 percent of its initial capacity.

• The research also mentioned that the new material battery's energy density of up to 390 watt-hours per kilogram reflects a longer battery life, 1.3 times that of the most advanced lithium-ion batteries on the market.

IN TODAY'S FINANCIAL MARKET,

Shanghai Composite Index Ended Nearly Flat on Monday

• China’s benchmark Shanghai Composite Index (000001.SH) closed nearly flat on Monday, while the Shenzhen Component Index (399001.SZ) rose 0.16%.

• Shanghai’s tech-heavy STAR 50 Index (000688.SH) lost 0.48% for the day, while Shenzhen’s similar ChiNext Index (399006.SZ) fell 0.1%.

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 571.33 yuan (about 80.31 U.S. dollars) per gram, 1.41 yuan lower than the previous trading day.

• The price for gold that is 99.99 percent pure or above went down 1.31 yuan from the previous trading day to 571.58 yuan.

Chinese yuan strengthens to 7.1139 against USD Monday

• The central parity rate of the Chinese currency renminbi, or the yuan, strengthened 219 pips to 7.1139 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 1.06 pct higher

• Hong Kong's stock market ended higher on Monday with the benchmark Hang Seng Index up 1.06 percent to close at 17,798.73 points.

• The Hang Seng China Enterprises Index climbed 0.95 percent to end at 6,278.63 points, and the Hang Seng Tech Index jumped 0.98 percent to close at 3,502.96 points. 

China's central bank conducts reverse repos Monday

• China's central bank conducted 471 billion yuan (about 66 billion U.S. dollars) of seven-day reverse repos at an interest rate of 1.7 percent Monday.

• The move aims to keep liquidity reasonable and ample in the banking system at the end of the month, the People's Bank of China said in a statement.

• A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.

• The central bank on Monday also pumped 300 billion yuan into the market via the medium-term lending facility (MLF), which will mature in one year at an interest rate of 2.3 percent.

AT THE END OF TODAY'S SHARING, LET'S TAKE A LOOK AT YOUR DAILY FUTURES:

Cotton futures closed higher Monday in daytime trading on the Zhengzhou Commodity Exchange (ZCE).

• The most active cotton contract for January 2025 delivery gained 210 yuan (about 29.52 U.S. dollars) to close at 13,800 yuan per tonne.

• On Monday, the total trading volume for six listed cotton futures contracts on the ZCE was 397,486 lots with a turnover of 27.23 billion yuan.

Sugar futures closed higher Monday in daytime trading on the Zhengzhou Commodity Exchange.

• The most active sugar contract for January 2025 delivery gained 30 yuan (about 4.22 U.S. dollars) to close at 5,573 yuan per tonne.

• On Monday, the total trading volume for six listed sugar futures contracts on the ZCE was 384,183 lots with a turnover of 21.47 billion yuan.

Iron ore futures closed higher on Monday in daytime trading at the Dalian Commodity Exchange.

• The most active iron ore contract for January 2025 delivery gained 25 yuan (about 3.51 U.S. dollars) to close at 750.5 yuan per tonne.

• On Monday, the total trading volume of 12 listed iron ore futures contracts on the exchange was 804,743 lots, with a turnover of about 59.08 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 January 2025 delivery gained 41 yuan (about 5.76 U.S. dollars) to close at 4,260 yuan per tonne.

• On Monday, the total trading volume of six listed No.1 soybean futures contracts on the exchange was 138,682 lots, with a turnover of about 5.87 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.