China to help com­bat risks in global mar­ket

China Daily (Hong Kong) - - BUSINESS | MARKETS -

BEI­JING — China’s ef­forts to rig­or­ously re­form and open up its fi­nan­cial sec­tor will help con­tain risks in the global sys­tem.

Aca­demics and an­a­lysts have warned of the dan­gers ahead against the back­drop of a weak re­cov­ery from the fi­nan­cial cri­sis, and pol­icy un­cer­tain­ties in the United States and Europe.

Al­though US Fed­eral Re­serve Chair­man Janet Yellen has sug­gested that we might not ex­pe­ri­ence an­other fi­nan­cial cri­sis “in our life­times”, it is still too early to de­clare vic­tory.

There ex­ist risks for the US in pur­su­ing a clean-up of its fi­nan­cial bal­ance sheet. Ef­forts to shore up the bank­ing sec­tor in parts of Europe are still lag­ging be­hind.

“With the de­vel­oped economies still on a slow-growth trend, Western coun­tries should strictly pre­vent their fi­nan­cial mar­kets from sys­temic risks,” said Bao Jianyun, a pro­fes­sor on the world econ­omy at the Ren­min Uni­ver­sity of China.

At the same time, lead­ing Western pol­i­cy­mak­ers are start­ing to shift from cri­sis firefighting to do­mes­tic growth. For in­stance, US pres­i­dent Don­ald Trump’s ad­min­is­tra­tion is propos­ing to roll back many of the post-cri­sis fi­nan­cial reg­u­la­tions.

“The pres­i­dent’s new dereg­u­la­tion plan may ben­e­fit his coun­try in the short term but would add risks to the in­ter­na­tional fi­nan­cial sys­tem,” said Ou Ming­gang, di­rec­tor of in­ter­na­tional fi­nance re­search cen­ter at China For­eign Af­fairs Uni­ver­sity.

A ma­jor risk fac­ing Europe is the with­drawal of mon­e­tary stim­u­lus by the Euro­pean Cen­tral Bank for the eu­ro­zone. There are also con­cerns about pos­si­ble Brexit sce­nar­ios when the United King­dom leaves the Euro­pean Union in 2019.

“These un­cer­tain­ties have re­sulted in con­fi­dence risks, es­pe­cially af­ter pro­tec­tion­ist moves by some coun­tries to close their doors to over­seas trade and in­vest­ment,” Bao warned.

As the trend of pro­tec­tion­ism spreads from de­vel­oped

The world’s sec­ond largest econ­omy will fur­ther open up its fi­nan­cial mar­kets.” Bao Jianyun, pro­fes­sor on world econ­omy at the Ren­min Uni­ver­sity of China

coun­tries to de­vel­op­ing ones, Bao re­garded China as the back­bone of global fi­nan­cial sta­bil­ity, with its ris­ing stature in the world econ­omy.

“China has now be­come the main driver of glob­al­iza­tion,” Bao said. “China’s fi­nan­cial open­ness and sta­bil­ity at­tach it­self an in­dis­pens­able role in the global fi­nan­cial sys­tem.”

The coun­try is com­mit­ted to im­prov­ing its in­vest­ment and mar­ket en­vi­ron­ment and ac­cel­er­at­ing poli­cies to open up to the out­side world, ac­cord­ing to a Mon­day meet­ing of China’s Cen­tral Lead­ing Group on Fi­nance and Eco­nomic Af­fairs.

“With the in­ter­na­tion­al­iza­tion of the Chi­nese currency, the world’s sec­ond largest econ­omy will fur­ther open up its fi­nan­cial mar­kets to pro­vide more pub­lic goods on the global mar­ket, partly re­plac­ing prior func­tions of Western pow­ers,” Bao said.

China sees guard­ing against sys­temic risks as the main theme of fi­nan­cial work.

To il­lus­trate that point, it was agreed that the State Coun­cil would set up a com­mit­tee to over­see fi­nan­cial sta­bil­ity and devel­op­ment at the Na­tional Fi­nan­cial Work Con­fer­ence which fin­ished on Satur­day.

“China is at­tach­ing great im­por­tance to fi­nan­cial sta­bil­ity and pro­mot­ing work to en­hance the coun­try’s com­pet­i­tive­ness,” said Bao, stress­ing that fi­nan­cial sta­bil­ity has a strate­gic im­por­tance for the coun­try.

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