Steering the financial ship
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E-mail Beijing Review, March 11, 2019
China will continue to launch prudent monetary policies and fend off financial risks, so as to better serve the real economy and promote high-quality development, according to Chinese central bank governor.
"China will not adopt the exchange rate as a way to win market competition, a method to improve export, or a tool to conduct trade frictions with the United States," Governor of the People's Bank of China Yi Gang highlighted at a press conference on financial reform and development for the Second Session of the 13th National People's Congress in Beijing on March 10.
"The global economic landscape is still undergoing complicated changes with certain downward pressures. Domestically, China also faces many economic and financial risks as well," Yi told the press.
According to Yi, China has seen changes in the internal and external environment this year. The trade talks with the United States proved productive. Thus the likelihood of a further interest rates hike by the Federal Reserve System has been reduced. The country's financial regulation and management of local governments' debts have also stabilized market expectations. But to retain this stability and avoid risk, further actions are required.
The country's monetary policy needs to be balanced in scale and to reflect counter-cyclical adjustments, which means that M2 money supplies and social financing growth will be in line with nominal gross domestic product growth in 2019. China will also step up financial support for private enterprises, especially ones which are small or micro-sized, Yi said.
China and the United States have reached consensus on the currency exchange rate, including respecting both sides' autonomy over monetary policies and adhering to the market-determined exchange rate system. Since China's market has been increasingly adaptable to fluctuations in the renminbi exchange rate and developed more tools of hedging risks, both domestic market participants and foreign investors will grow more confident in the market-determined renminbi, the governor added.
"China will not adopt the exchange rate as a way to win market competition, a method to improve export, or a tool to conduct trade frictions with the United States," Yi highlighted.
Yi stressed that the opening up of China's financial market is conducive to both the country and the world. "China's stock market, debt market and other financial markets will be gradually opened to the world," he said.
