Highlights of central bank governor's news conference

Updated 2018-03-09 16:16:01

Yuan internationalization aids opening-up

Renminbi internationalization promotes China's opening-up, said Zhou Xiaochuan, governor of the People's Bank of China.[Special coverage]

In terms of market access, China could take more bold actions to further open up, Zhou added.

He also predicted the trend of the opening-up of financial market will be further encouraged.

Leverage levels stabilizing, gradually falling

China's leverage levels are stabilizing and gradually falling, said Zhou Xiaochuan, central bank governor.

He also said that the central bank will play a more important role in the country's new regulatory framework.

"The trend of stabilizing and gradually falling leverages is entrenched," he said when responding to question that China's leverage levels are actually rising. The money supply growth, for example, has fallen even below nominal GDP growth, he said. "There are various debt financing indicators and one should not pick one indicator to come to the conclusion (of rising leverages)," he said.

He also said the country will study the twin peaks model of financial regulation in some countries, but not necessarily adopt it. "It (whether China will adopt the model) will mainly be based on China's conditions."

He said that under the new financial regulatory framework, China is already dealing with the already surfacing financial risks in financial and quasi-financial institutions to maintain health of the financial system.

M2 not the only money supply indicator

The broad measure of money supply, or M2, should not be the only indicator for understanding China's liquidity conditions, said Zhou Xiaochuan.

By the end of 2017, China's M2 growth was 8.2 percent, below the nominal year-on-year GDP growth of 8.5 percent, triggering concerns over inadequate liquidity to bolster normal economic growth.

"China's M2 growth is slightly lower than nominal GDP growth, but we should monitor more indicators, such as prices and jobs, to see whether liquidity is tight," he said.

There is no one simple indicator to judge the conditions of money supply, Zhou said. "It is a quite complex issue and multiple factors should be taken into consideration."

China's consumer price index grew by 1.6 percent year-on-year in 2017, well below the inflation target of 3 percent, and its unemployment rates, in terms of both registered and surveyed unemployment rate, were low, statistics of the National Bureau of Statistics show.

China to reduce reliance on capital support

China will rely less on wide capital support policies for economic growth as it seeks high-quality development, the country's central bank governor said.

"We plan to use the money in a more efficient way as the money supply is sufficient enough," Zhou said at the news conference, adding that it will not point to liquidity crunch.

Both monetary and foreign exchange policies will be adjusted accordingly, he said.

As for whether China will follow US Federal Reserve future steps to raise interest rates, Yi Gang, vice -governor of the central bank, said the PBOC mainly looks at the domestic economic and financial conditions and will make comprehensive consideration.

More access to financial market, but tougher oversight

China will push the opening up of its financial market but it does not necessarily mean loosening financial regulation, the central bank said.

"We have entered the new (development) stage and we can be bolder in opening up market access (to foreigners)," Zhou Xiaochuan said.

The internationalization of the yuan also help push the opening up of the financial market and China will steadily and gradually push forward the capital account convertibility, Zhou said.

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