Fi­nan­cial risks to be pre­vented

Lead­er­ship: Prop­erty mar­ket will be sta­bi­lized, co­or­di­na­tion strength­ened

China Daily (Hong Kong) - - FRONT PAGE - By XIN ZHIMING and JING SHUIYU

China will strengthen the co­or­di­na­tion of fi­nan­cial reg­u­la­tion, sta­bi­lize the prop­erty mar­ket and pre­vent sys­temic fi­nan­cial risks, ac­cord­ing to a state­ment is­sued af­ter a top lead­er­ship meet­ing on Mon­day.

“Fi­nan­cial dis­or­der will be tack­led thor­oughly, fi­nan­cial co­or­di­na­tion will be strength­ened, and the ef­fi­ciency and level of fi­nan­cial sec­tors sup­port­ing the real econ­omy will be im­proved,” said the state­ment re­leased af­ter a meet­ing of the Po­lit­i­cal Bureau of the Com­mu­nist Party of China Cen­tral Com­mit­tee, presided over by Xi Jin­ping, gen­eral sec­re­tary of the Cen­tral Com­mit­tee.

“The prop­erty mar­ket will be sta­bi­lized, the con­ti­nu­ity and sta­bil­ity of poli­cies will be main­tained, and the es­tab­lish­ment of the long-term mech­a­nism (in man­ag­ing the prop­erty mar­ket) will be ac­cel­er­ated,” the state­ment said. “(China) will hold fast to the bot­tom line that no sys­temic fi­nan­cial risks should oc­cur,” the meet­ing said, ac­cord­ing to Xin­hua News Agency.

“Pol­i­cy­mak­ers have re­it­er­ated such stances re­cently. It shows that they will take more co­or­di­nated steps to fend off po­ten­tial fi­nan­cial risks,” said Gao Hai­hong, an econ­o­mist of the Chi­nese Academy of So­cial Sciences, cit­ing the es­tab­lish­ment of a com­mit­tee un­der the State Coun­cil, China’s Cabi­net, to over­see fi­nan­cial sta­bil­ity and devel­op­ment, a de­ci­sion made at the Na­tional Fi­nan­cial Work Con­fer­ence, which ended on July 15.

“Fi­nan­cial reg­u­la­tions used to be frag­mented and of­ten failed to catch up with fi­nan­cial mar­ket devel­op­ment. The Po­lit­i­cal Bureau meet­ing has urged it be strength­ened, and I think it will be­come more co­or­di­nated and ef­fi­cient,” Gao said.

The real es­tate mar­ket is also a cru­cial fac­tor that has an im­por­tant bear­ing on the fi­nan­cial mar­ket and there­fore should be dealt with prop­erly, an­a­lysts said.

“Slump­ing prop­erty prices could trig­ger fi­nan­cial cri­sis, as Ja­pan’s ex­pe­ri­ences, the Asian fi­nan­cial cri­sis in the late 1990s and the global fi­nan­cial cri­sis that be­gan 10 years ago have all proved,” said Dai Yiyi, an econ­o­mist at Xi­a­men Univer­sity. As China’s prop­erty prices in some ma­jor cities have been hov­er­ing at high lev­els, pol­i­cy­mak­ers must be care­ful in ad­dress­ing the mar­ket so that prices won’t con­tinue to rise, nor will they slump, he said. “That’s why the Po­lit­i­cal Bureau meet­ing urged to ‘sta­bi­lize’ the prop­erty mar­ket.”

So far, China has man­aged to keep the fi­nan­cial mar­ket largely sta­ble, an­a­lysts said. “While it has strength­ened over­all fi­nan­cial reg­u­la­tion, sig­naled by the es­tab­lish­ment of the fi­nan­cial sta­bil­ity com­mit­tee un­der the State Coun­cil, China has, in par­tic­u­lar, ef­fec­tively con­trolled cap­i­tal out­flow and the yuan’s ex­change rate has sta­bi­lized,” said Gao of CASS.

“While fully af­firm­ing eco­nomic per­for­mance, we must at the same time clearly rec­og­nize the many prob­lems and con­tra­dic­tions in the econ­omy,” the meet­ing state­ment said.

China will “ac­tively re­solve the pileup of lo­cal govern­ment debt risks, and ef­fec­tively reg­u­late lo­cal gov­ern­ments’ debt fi­nanc­ing”, said the state­ment.

China will also “make un­remit­ting ef­forts to push for­ward sup­ply-side struc­tural re­form, prop­erly re­solve ma­jor po­ten­tial risks, and pro­mote sus­tain­able and healthy eco­nomic and so­cial devel­op­ment”, the state­ment said.

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