Nation will open financial sector
China will stick to its pledge to open up the financial sector while reining in high leverage and financial risks, the country's new central bank governor said on Sunday at the annual China Development Forum (CDF) in Beijing.
The three tasks that matter most for the country's financial sector are maintaining a prudent and neutral monetary policy, pushing for financial reforms and opening-up of the financial sector, and preventing financial risks, Yi Gang said in his first public appearance since being appointed as the new head of the People's Bank of China (PBOC) on March 19, replacing 70-year-old Zhou Xiaochuan who had been at the helm of China's central bank for nearly 16 years.
U.S.-educated Yi, who is 10 years younger than his predecessor, is a long-serving deputy governor of the country's central bank. Market watchers widely expect him to follow Zhou's path of advancing financial liberalization.
China will move to allow greater access to its financial market, providing a level playing field for foreign investors and their domestic counterparts, Yi said on Sunday.
The new PBOC head also devoted a substantial part of his speech to the significance of financial risk prevention.
The country is still facing potential risks such as high levels of debt at some State-owned enterprises and among local governments, as well as the rise in household debt.
Also, although the growth of unregulated shadow banking has been curbed, it is still a problem, and some institutions illegally engage in financial activities without having obtained financial licenses, he said, adding that some unlawful financial activities have seen rapid expansion amid the rise of internet finance.
The country's efforts to rein in financial risks have been well received so far. It is an important task for China, and the recent establishment of a financial stability oversight committee is significant for managing the country's financial risks, World Bank CEO Kristalina Georgieva said on Sunday during the forum.
The PBOC is seen to be keeping pace with the Federal Reserve's moves to normalize U.S. monetary policy.
Continuing its rate hike cycle, the Fed raised interest rates by a quarter of a percentage point on Wednesday (U.S. time), the first rate hike under Jerome Powell, its new chairman.
In response, the PBOC increased the interest rate on seven-day reverse repurchase (or repo) agreements by 5 basis points to 2.55 percent, according to a statement on the PBOC's website on Thursday.