China Can ‘Open Up’ More, We Expect it Will
People’s Bank of China (PBoC) Governor Zhou Xiaochuan, 70 anni, said market access reforms should be accelerated and that the world’s 2nd-largest economy “ can be bolder in opening up.”
Policy makers are now focused on achieving “quality” growth, rather than the pace of expansion, which means reliance on credit may ease, Zhou told a briefing Friday during the National People’s Congress in Beijing.
He said it’s positive major economies are exiting years of easy monetary policy amid a global recovery.
“When we’re pursuing quality-oriented growth, we’ll depend less heavily on the credit-based growth model,” Zhou said, smiling often and looking confident and relaxed during the more than hour-and-a-half long appearance that may be among his last as the PBoC boss.
Deputy Governor Yi Gang said stable progress will be made on capital account convertibility. State Administration of Foreign Exchange Director Pan Gongsheng said cross-border flows are stable.
Zhou has led the PBoC for 15 years that we have been following China’s growth, the longest tenure in the monetary authority’s history.
NPC delegates will vote on 19 March to appoint a central bank boss, who will face the challenge of keeping the economy growing while defusing debt risks and steering monetary policy.
In recent months Zhou has capped his career as a determined advocate of financial openness, helping China’s RMB Yuan gain reserve-currency status, with warnings over mounting debt risks.
“I’ve spent so many years working in the financial system and many things have happened,” Zhou said with a touch of emotion. “It’s my honor to work with everyone to push ahead with financial reforms and opening up. I feel very honored.”
Zhou’s call for bolder opening came just after US President Donald Trump announced broad steel and aluminum tariffs and as his administration is said to be weighing clamping down on Chinese investments in the country and imposing tariffs on a broad range of its imports.
While China has announced the removal of foreign-ownership limits on its financial system, much of the economy is difficult for foreign investors to enter.
Zhou spoke a few hours after European Central Bank (ECB) President Mario Draghi’s dialing back of easing measures and a Bank of Japan meeting at which policy settings were left unchanged.
On financial stability, a Key objective for top leaders, Zhou said China “has entered a phase of stabilizing and gradually reducing leverage.” Reforms are in the works and the PBoC will get a greater role in supervision as the government boosts regulatory coordination, he said.
As regulators weigh new rules to supervise financial holding companies, Zhou disclosed for the 1st time that they will be subject to more stringent capital requirements and be scrutinized for connected transactions.
On the RMB Yuan (CNY), Zhou said the process of the currency’s globalization will be gradual. Its internationalization, long a goal of Beijing’s leaders, can be stepped up when capital account restrictions have been lifted, he said.
After climbing the most last year since Y 2008, RMB yuan’s rally may slow if the USD gains a more Hawkish outlook the Fed. We will have to wait and see, Friday’s closing tally for the pair: USD/CNY -0.16% to 6.328
Have a terrific weekend.
Latest posts by HEFFX Australia (see all)
- Resorts in Asia Heighten the Hygiene - May 27, 2020
- Dow Jones Industrial Average (.DJI) Traders Return to Wall Street - May 27, 2020
- Gold 1 OZ (XAU=X) Price Target $2500 - May 26, 2020