News eDaily27 Mar 2018

China:Central bank reiterates pledge on financial reform and opening up

27 Mar 2018

Mr Yi Gang, China's new central bank governor, has said that China will push forward reform and opening up of the financial industry while preventing financial risks through regulation and supervision.

In his maiden speech as the new chief of People's Bank of China (PBOC), Mr Yi summarised the current financial policies as focussing on prudent monetary policy, promotion of reform and opening up in financial industry, and maintaining stability and diffusing any major risks.

He said: "Opening up leads to progress while closure results in backwardness and risks."

According to a report by the China News Service, he reiterated a pledge by the Chinese government to open up the financial services sector. China will keep lifting restrictions on financial industry access and giving equal treatment to all investors, in line with the negative list mechanism, he said.

In addition to the stocks and bond connect projects between A-share market and Hong Kong as well as A-share included into MSCI, China will further open its foreign exchange market and fully implement the negative list mechanism in terms of market access.

The sector's opening up will proceed in coordination with the foreign exchange rate mechanism reform and capital account convertibility, he said.

China will steadily internationalise the Chinese yuan, he said. The second phase of the China International Payments System, a cross-border yuan settlement system, will be rolled out soon, he said.

China will place equal emphasis on preventing financial risks, he said, noting that the opening up of the financial sector must be accompanied by the development of financial regulation.

To maintain the stability of the financial industry and guard against risks is a major task for China's financial sector, and China has the capability to prevent risks, especially the high leverage, he said.

Commenting on what additional financial risks may be caused by new uncertainties, such as the trade tension between China and the US, Mr Yi said that fluctuation is not rare in a market economy and China's banking system as well as its securities and insurance markets are fully capable of dissolving risks from external impacts.

He also said that high debt levels for Chinese state-owned companies, local governments and households are still a challenge, reported Associated Press.

Regulators will "deepen regulatory system reform and enhance resilience against systemic risk," Mr Yi said. He said that will include steps to "impose more financial discipline" on government-owned companies, develop a better financing system for local governments and "create a system to prevent risk in the real estate sector".

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