China Central bank to improve regulatory framework
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.