Monetary policy eyes boosting capital markets

China’s central bank is focused on further boosting capital markets and facilitating corporate financing in order to raise confidence among private businesses and offset headwinds, both external and internal.

The clear signal came from the latest third-quarter China Monetary Policy Report released by the People’s Bank of China late on Friday, which highlighted additional efforts to improve financing channels and ease enterprises’ borrowing difficulties. It also underlined the significance of a welldeveloped equity market in the long run to benefit corporate financing.

In the report, the monetary authority announced no change in its overall policy stance, which is still characterized as “prudent and neutral”, and aims to control the total money supply and seek a balance between “multiple targets”. However, dynamic and advance policy adjustments are possible under different circumstances and situations, the report stressed.

Commercial banks, as well as the stock and bond markets, will undertake the majority of financing tasks, with the central bank ensuring sufficient liquidity to maintain a lower lending interest rate to make financing both efficient and affordable, according to analysts.

Some financial channels not employed by the “standard” banking system could be allowed again to provide funding to private companies, a policy adviser told China Daily. Some of these channels used to be major components of the so-called “shadow banking sector”, which were put on hold by a regulation on asset management products issued in April.

“It will not be a simple reopening of the currently banned off-balance-sheet business. Instead, they should run under a new regulatory framework to avoid previous wild expansions,” said the adviser, on condition of anonymity.

Judging from the report, further specified supportive measures might be released afterward to encourage lending to private companies, said analysts, who also speculated financial regulators may tolerate a slightly higher nonperforming loan ratio and leveraging level for commercial banks, who face regulatory assessment pressures.

Song Yu, an economist with Goldman Sachs, said, “For more tangible measures, we now foresee a higher probability that total financing growth will accelerate from now, but more likely at a very measured pace.”

For instance, beauty products from Japanese cosmetics specialist Kao and Dyson hairdryers booked 10 million yuan respectively in sales in the first hour of trading on Sunday, according to Alibaba.

The trend echoed research by global consultancy Oliver Wyman, which revealed that around 57 percent of surveyed consumers intend to buy overseas goods, with sales expected to make up onethird of total consumer spending.

In addition to Singles Day, global brands will definitely see China as one of its most promising markets year-round and the country is becoming a solid growth engine, said Jason Yu, China general manager of Kantar Worldpanel.

The vast population base and the unleashed consumption power from smaller cities, townships and rural areas are magnets for international brands.” Jason Yu, China general manager of Kantar Worldpanel

“The vast population base and the unleashed consumption power from smaller cities, townships and rural areas are magnets for international brands,” Yu said.

“Temporary trade frictions are unlikely to undermine such robust momentum,” the manager added.

Nov 11 is not just about selling a lot of products to consumers, but a time where “we test our supply chain system and our new products, or even better, we test new ideas”, Joost Vlaanderen, president of Mondelez China, the company behind the iconic Oreo cookie, told Alibaba’s news portal Alizila.

Echoing China’s grand opening-up policy at a commercial level, this year’s shopping gala is set to become a natural extension of the just-concluded China International Import Expo in the digital space, serving as the bellwether of the latest global business practices, said Chu Yin, a professor at the University of International Relations in Beijing.

Wang Xiaofeng, senior analyst at consultancy Forrester, said gross merchandise volume generated in the 24-hour festival will no longer be a critical focus.

The event evolves from a pure discounting occasion to a test bed for new commerce initiatives and emerging technologies being applied in online shopping scenarios, Wang said.