Everything You Need to Know About China's Economy on Friday (Sept. 27)
Your Daily & Trustworthy Updates on the Chinese Economy
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Good Friday! This is TIAN in Beijing.
Welcome to monitor the pulse of China’s economy together with me.
DRIVING THE DAY, China's central bank cut the interest rate of seven-day reverse repos from 1.7 percent to 1.5 percent.
The move aims at intensifying counter-cyclical adjustment of the monetary policy and supporting the stable economic growth of the country, according to a statement of the People's Bank of China.
The interest rate of 14-day reverse repos and those of temporary repos and reverse repos will continue to be determined by the interest rate of seven-day reverse repos in the open market, and the range of adjustment will remain unchanged.
On the same day, the bank also announced a cut in the reserve requirement ratio (RRR) by 0.5 percentage points for financial institutions.
Starting Friday, the weighted average RRR for lenders will come to around 6.6 percent, while those having already implemented a 5 percent RRR will not be involved, according to a statement of the Bank.
The central bank adheres to a supportive monetary policy with a strengthened intensity and more targeted regulation to create a sound monetary and financial environment for stable economic growth and high-quality development, the statement said.
MEANWHILE, profits of China's major industrial firms grew 0.5 percent year on year in the January-August period, slowing down from a 3.6-percent rise in the first seven months of 2024, official data showed Friday.
The National Bureau of Statistics said this moderation in growth is attributed to insufficient effective market demand, the impact of high temperatures, heavy rains and floods in some regions of China, and a high base figure.
Despite such challenges, industrial profits continued their growth trend. The bureau added that new growth drivers like high-tech manufacturing maintained relatively fast growth while high-quality development of the industrial economy continued to advance steadily.
During this period, the high-tech manufacturing sector saw profits soar 10.9 percent year on year, outpacing the overall industrial average by 10.4 percentage points.
Consumer goods and equipment manufacturing reported stable growth, bolstered by a steady recovery in domestic consumption and a relatively fast rise in industrial product exports.
Profits of consumer goods manufacturers expanded 8.4 percent year on year, and the equipment manufacturing sector posted a profit rise of 3.2 percent compared with a year earlier.
The bureau warned that the foundation of the recovery in industrial profits needs to be further consolidated, as domestic demand remains weak and the external environment continues to be complex.
ALSO ON FRIDAY, the value of China's international trade in goods and services reached approximately 4.18 trillion yuan in August this year, marking an increase of 4 percent year on year, official data showed.
In U.S. dollar terms, the country's exports of goods and services amounted to 322.4 billion U.S. dollars, while imports totaled 263.5 billion dollars, recording a surplus of 58.9 billion dollars, the State Administration of Foreign Exchange said.
The export value of goods reached nearly 2.07 trillion yuan while the import value of goods totaled about 1.5 trillion yuan, resulting in a surplus of 572.4 billion yuan.
The value of exported services amounted to 230.8 billion yuan and the value of imported services stood at 383 billion yuan, producing a deficit of 152.2 billion yuan.
IN ADDITION, Chinese authorities announced that they have uncovered over 2.2 billion yuan (about 313.83 million U.S. dollars) of medical insurance funds suspected of violating relevant regulations this year.
During a press conference held on Friday, the National Healthcare Security Administration disclosed that it had conducted surprise inspections on more than 500 designated medical institutions participating in the medical insurance scheme. These inspections covered all provincial-level regions and were carried out in 2024.
Yan Qinghui, deputy head of the administration, revealed that 111 designated medical institutions were found to have engaged in insurance fraud during these special inspections.
Yan stated that authorities recovered up to 13.66 billion yuan of misused medical insurance funds from January to August this year.
Furthermore, China is actively focusing on enhancing systematic and comprehensive supervision. It is continuously innovating its supervision methods to establish and enhance a long-term mechanism for the supervision of medical insurance funds, Yan added.
IN TODAY'S FINANCIAL MARKET,
Shanghai Composite Index Rose 2.88% on Friday
China’s benchmark Shanghai Composite Index (000001.SH) gained 2.88% on Friday, while the Shenzhen Component Index (399001.SZ) rose 6.71%.
Shanghai’s tech-heavy STAR 50 Index (000688.SH) gained 6.76% for the day, while Shenzhen’s similar ChiNext Index (399006.SZ) rose 10.0%.
Chinese yuan strengthens to 7.0101 against USD Friday
The central parity rate of the Chinese currency renminbi, or the yuan, strengthened 253 pips to 7.0101 against the U.S. dollar Friday, 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.
China's benchmark interbank gold prices HIGHER Friday
According to the China Foreign Exchange Trade System, the benchmark price for gold that is 99.95 percent pure or above stood at 595.02 yuan (about 84.88 U.S. dollars) per gram, 2.94 yuan higher than the previous trading day.
The price for gold that is 99.99 percent pure or above went up 1.49 yuan from the previous trading day to 597.15 yuan.
China's central bank conducts reverse repos Friday
The central bank conducted 278 billion yuan (about 39.66 billion U.S. dollars) of 14-day reverse repos on Friday at an interest rate of 1.65 percent, 20 basis points lower than the previous day.
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.
Hong Kong stocks close up, turnover hits new high
Hong Kong's stock market ended higher Friday with the benchmark Hang Seng Index up 3.55 percent to close at 20,632.3 points.
Hong Kong stocks continued the upward trend Friday, with the Hang Seng Index surpassing 20,000 points at the opening and the gains extended. The main board turnover exceeded 445 billion HK dollars (about 57.21 billion U.S. dollars), hitting a new high.
The Hang Seng China Enterprises Index rose 3.01 percent to end at 7,299.9 points, the Hang Seng Tech Index rose 5.78 percent to end at 4,453.24 points.
AT THE END OF TODAY'S SHARING, LET'S TAKE A LOOK AT YOUR DAILY FUTURES:
Cotton futures closed higher Friday in daytime trading on the Zhengzhou Commodity Exchange (ZCE).
The most active cotton contract for January 2025 delivery gained 315 yuan (about 44.94 U.S. dollars) to close at 14,555 yuan per tonne.
On Friday, the total trading volume for six listed cotton futures contracts on the ZCE was 566,712 lots with a turnover of 40.76 billion yuan.
Sugar futures closed higher Friday in daytime trading on the Zhengzhou Commodity Exchange.
The most active sugar contract for January 2025 delivery gained 16 yuan (2.28 U.S. dollars) to close at 5,942 yuan per tonne.
On Friday, the total trading volume for six listed sugar futures contracts on the ZCE was 383,464 lots with a turnover of 22.75 billion yuan.
Iron ore futures closed higher on Friday in daytime trading at the Dalian Commodity Exchange.
The most active iron ore contract for January 2025 delivery gained 31.5 yuan (about 4.49 U.S. dollars) to close at 750 yuan per tonne.
On Friday, the total trading volume of 12 listed iron ore futures contracts on the exchange was 870,209 lots, with a turnover of about 64.51 billion yuan.
As the world's largest importer of iron ore, China opened the DCE iron ore futures to international investors in May 2018.
No.1 soybean futures closed higher on Friday in daytime trading at the Dalian Commodity Exchange.
The most active No.1 soybean contract for January 2025 delivery gained 41 yuan (about 5.85 U.S. dollars) to close at 4,195 yuan per tonne.
On Friday, the total trading volume of six listed No.1 soybean futures contracts on the exchange was 163,582 lots, with a turnover of about 6.88 billion yuan.
China is the world's largest soybean importer.
About the Newsletter:
Ran by TIAN Dongdong, this newsletter features daily and trustworthy content on China's economy. Having worked in Brussels, London, Cairo, and Tripoli for Chinese media as correspondent for several years, TIAN is now based in Beijing.