PBOC:Fo­cus on key risk points

China Daily (Hong Kong) - - TOP NEWS - By WANG YANFEI wangyan­fei@chi­nadaily.com.cn

China should re­dou­ble its ef­forts to reg­u­late key risk points in the fi­nan­cial sec­tor to en­sure fi­nan­cial sta­bil­ity, the cen­tral bank said on Tues­day.

While risks in the na­tion’s fi­nan­cial sec­tor are man­age­able now, the cen­tral bank will el­e­vate the im­por­tance of pre­ven­tion, the Peo­ple’s Bank of China (PBOC) said in its an­nual China Fi­nan­cial Sta­bil­ity Re­port re­leased on Tues­day.

The bank and other fi­nan­cial reg­u­la­tory bod­ies will work to fend off risks in­volved in shadow bank­ing, real es­tate fi­nanc­ing, lo­cal govern­ment fi­nanc­ing plat­forms, in­ter­net fi­nanc­ing and il­le­gal fundrais­ing ac­tiv­i­ties, the re­port said.

Reg­u­la­tors will in­crease su­per­vi­sion over out­bound in­vest­ment and pre­vent shocks from ex­ter­nal chal­lenges, it said.

Re­cent im­prove­ments in eco­nomic data pro­vide a solid foun­da­tion for the govern­ment to en­hance its con­trol of fi­nan­cial risks, said Shen Jian­guang, chief econ­o­mist of Mizuho Se­cu­ri­ties Asia Limited.

Since China’s econ­omy fin­ished strong in the first quar­ter, with 6.9 per­cent year-onyear growth, many ex­perts be­lieve the sec­ond quar­ter, which ended in June, is also likely to show high-rate growth, partly due to a re­cov­ery in the man­u­fac­tur­ing sec­tor.

In­vest­ment and a rel­a­tively loose macro en­vi­ron­ment have boosted the econ­omy but also led to an ac­cu­mu­la­tion of fi­nan­cial risks in sec­tors pump­ing up the econ­omy. The pileup of debt has be­come a chal­lenge in re­cent years.

“Risk points in the fi­nan­cial sec­tor have not changed much com­pared with the same pe­riod last year. They have al­ways been there. Strong eco­nomic growth means reg­u­la­tors have more space to deal with risks,” said Zhao Qing­ming, chief econ­o­mist at the re­search in­sti­tute of the China Fi­nan­cial Fu­tures Ex­change.

He said the risk level is not strik­ing, but it is cru­cial to en­sure that it will not threaten over­all fi­nan­cial sta­bil­ity.

“The key is to im­ple­ment fi­nan­cial re­forms and to make sure reg­u­la­tory rules can be rolled out in the right places,” he said.

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