Li sees sta­ble, healthy fi­nan­cial mar­ket ahead

China Daily (Canada) - - FRONT PAGE - By ZHAO YI­NAN in Dalian zhaoy­i­nan@chi­

China is in con­trol, and its re­form will con­tinue. This was the mes­sage that Premier Li Ke­qiang de­liv­ered to an in­ter­na­tional au­di­ence in a brief­ing about the Chi­nese econ­omy on Wed­nes­day.

Re­fer­ring to the re­cent wild fluc­tu­a­tions in the Chi­nese stock mar­ket, Li sought to as­suage the world’s con­cerns by say­ing that China is fully ca­pa­ble of over­com­ing sys­temic risk to its fi­nan­cial sys­tem.

Ef­fec­tive pol­icy mea­sures have been taken to­ward sta­bi­liz­ing the mar­ket, the premier said in a di­a­logue with global busi­ness lead­ers at the an­nual meet­ing of the New Cham­pi­ons of the World Eco­nomic Fo­rum, also known as Sum­mer Davos, in the north­east port city of Da-lian, Liaon­ing province.

“Such ef­forts are made to pre­vent the wide spread of fi­nan­cial risks, and so far we can say that the sys­temic risks to the fi­nan­cial mar­ket have been pre­vented,” Li said in his first public com­ments on the fi­nan­cial mar­ket since the Shang­hai Com­pos­ite In­dex dropped by about 40 per­cent in July to trig­ger a gov­ern­men­tled, large-scale in­ter­ven­tion.

How­ever, Li said gov­ern­ment in­ter­ven­tion is a stan­dard global prac­tice and is “by no means in­tended to weaken or re­place” the role of the mar­ket it­self.

He of­fered as­sur­ance that the next step that China will take is to “stick to the mar­ket-ori­ented and law-abid­ing prin­ci­ple in build­ing a trans­par­ent, sta­ble and healthy fi­nan­cial mar­ket”.

China will not be a cause of world eco­nomic risk. In­stead, the coun­try will con­tinue to be a driv­ing force of global de­vel­op­ment, he said.

Com­ment­ing on the ex­change rate of the yuan, the Chi­nese premier said China doesn’t think con­tin­ued de­pre­ci­a­tion will ben­e­fit its in­tended yuan in­ter­na­tion­al­iza­tion, sig­nal­ing that Bei­jing has no in­ter­est in de­lib­er­ately in­flu­enc­ing the yuan’s ex­change rate against the US dol­lar.

The yuan has seen a dip of more than 4 per­cent in its ex­change rate against the US dol­lar since the cen­tral bank changed its ex­change rate for­ma­tion mech­a­nism in Au­gust. But the change was made “in re­sponse to the global ten­dency led by the de­pre­ci­a­tion of many other cur­ren­cies against the US dol­lar”, Li said.

But even with the re­cent ad­just­ment, the yuan’s ex­change rate against the dol­lar is still higher than in 2013 by 15 per­cent, when the cur­rent gov­ern­ment was set up, he said.

“We don’t in­tend to stim­u­late ex­port by de­val­u­at­ing the yuan, since it is not a move to match the gov­ern­ment’s aim to re­struc­ture the econ­omy. Nor does China welcome com­pet­i­tive de­val­u­a­tion of cur­ren­cies in the world,” Li em­pha­sized.

Be­cause China has been deeply in­te­grated with the global econ­omy, the coun­try would not ben­e­fit and could only be harmed should a com­pet­i­tive de­val­u­a­tion oc­cur, Li said.

As a case in point, Li said busi­ness peo­ple from Chi­nese ex­port com­pa­nies told him that the best thing they wanted was a sta­ble yuan, oth­er­wise it would be hard for those com­pa­nies to ob­tain long-term con­tracts.

Yori­hiko Kojima, chair­man of the board of Mit­subishi Corp, Ja­pan’s largest trad­ing com­pany, said he be­lieves that the Chi­nese mar­ket will im­prove in a cou­ple of years, since Li is a very ca­pa­ble leader, and he doesn’t think that the Chi­nese econ­omy over­all is fac­ing great dif­fi­cul­ties.

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