China Cen­tral bank to im­prove reg­u­la­tory frame­work

The Pak Banker - - FRONT PAGE - BEI­JING -AFP

China's cen­tral bank said Tues­day it would im­prove the frame­work of reg­u­la­tion un­der­pinned by mon­e­tary pol­icy and macro-pru­den­tial pol­icy in 2018.

The im­prove­ments will be made partly by step­ping up su­per­vi­sion over shadow bank­ing and real es­tate fi­nance to fend off fi­nan­cial risks, ac­cord­ing to a state­ment of the work con­fer­ence of the Peo­ple's Bank of China (PBOC), the cen­tral bank

Such a reg­u­la­tion, known as a "twopil­lar" pol­icy frame­work, was es­tab­lished in 2017 to bet­ter dis­solve sys­temic risk and en­sure fi­nan­cial sta­bil­ity. Un­der the sys­tem, liq­uid­ity has be­comes more sta­ble, cross-bor­der cap­i­tal flow more bal­anced and off-bal­ance sheet wealth man­age­ment prod­ucts bet­ter su­per­vised.

The PBOC also said it would main­tain a pru­dent and neu­tral mon­e­tary pol­icy, and di­rect more cap­i­tal into key eco­nomic ar­eas and weak links, such as ru­ral vi­tal­iza­tion and poverty re­lief.

More ef­forts will be made to im­prove dis­posal of bond de­faults, and unify rules on ap­proval and in­for­ma­tion dis­clo­sure of cor­po­rate credit bond is­suance. The cen­tral bank also listed fi­nan­cial ser­vices in home rentals, es­tab­lish­ment and im­prove­ment of a long-term mech­a­nism on su­per­vi­sion over on­line fi­nance and on risk preven­tion, and open­ing up of the bond mar­ket as im­por­tant tasks this year.

Mean­while, Chi­nese in­vest­ment in the US tech sec­tor could bring more op­por­tu­ni­ties than threats and should be viewed from the right per­spec­tive, ac­cord­ing to a US pri­vate equity (PE) in­vest­ment fund.

Pol­i­cy­mak­ers may be­moan Chi­nese in­vest­ment in US com­pa­nies, but those same in­vest­ments can pro­vide ac­cess and ac­cel­er­a­tion for small and medium-sized firms to gain a foothold in the largest, fastest-grow­ing elec­tron­ics mar­ket on earth, ac­cord­ing to Ray Bing­ham, co- founder and part­ner at Canyon Bridge Cap­i­tal Part­ners, a global PE fund fo­cus­ing on the tech sec­tor.

The PE firm's an­chor in­vestor is from China and the firm has of­fices in Sil­i­con Val­ley and Bei­jing. It made head­lines last year with a failed at­tempt to buy US semi­con­duc­tor maker Lat­tice Semi­con­duc­tor. The Com­mit­tee on For­eign In­vest­ment in the United States (CFIUS) be­lieved the deal might com­pro­mise na­tional se­cu­rity.

In Jan­uary, the US gov­ern­ment blocked Alibaba's fi­nan­cial arm's pur­chase of US money trans­fer plat­form MoneyGram and Huawei's co­op­er­a­tion with one lead­ing US tele­com ser­vice provider over sim­i­lar con­cerns.

"I think that as the US econ­omy re­al­izes the in­ter­de­pen­dence be­tween China and the United States in par­tic­u­lar, they will un­der­stand that free and open mar­kets also means free and open cap­i­tal mar­kets. And the abil­ity for a PE fund whose money comes from China should be viewed as a rea­son­able and con­struc­tive thing," said Bing­ham.

Canyon Bridge suc­cess­fully bought UK graphic pro­ces­sor maker Imag­i­na­tion Tech­nolo­gies Group last Novem­ber. Bing­ham said the re­ac­tion in Europe has been very dif­fer­ent than the re­ac­tion in Wash­ing­ton as Euro­pean of­fi­cials saw the in­vest­ment as a good thing that could strengthen UK tech­nol­ogy jobs and in­fra­struc­ture.

"We not only bring money, but also help build busi­nesses with our net­works all over the world to help com­pa­nies ex­pand into new mar­kets," he pointed out.

As a veteran in the semi­con­duc­tor busi­ness, Bing­ham was im­pressed with the rapid growth of the in­dus­try in China.

"When I came into this busi­ness, the semi­con­duc­tor was just be­ing de­vel­oped, and now there are many foundries and chip fac­to­ries in China that are pro­duc­ing very ad­vanced semi­con­duc­tors. No­body could have seen that 20 years ago," he said.

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