Risk preven­tion a pri­or­ity

Bad loans, prop­erty bub­bles must be han­dled, fi­nan­cial ex­pert at CPPCC says

China Daily (Latin America Weekly) - - Two Sessions - By CHEN JIA chen­jia@chi­nadaily.com.cn

Fi­nan­cial risk preven­tion will con­tinue to be a tough task this year, re­quir­ing joint ef­forts to “hold the bot­tom line”, es­pe­cially by con­trol­ling the over­all money sup­ply and keep­ing a close eye on prop­erty bub­bles, a na­tional po­lit­i­cal ad­viser said on Sun­day.

Yang Weimin, deputy head of the Of­fice of the Cen­tral Lead­ing Group on Fi­nan­cial and Eco­nomic Af­fairs, iden­ti­fied the fi­nan­cial sys­tem as “the most im­por­tant area” for fend­ing off risks. He called for mea­sures to con­trol to­tal money sup­ply and mon­i­tor credit growth.

“Loop­holes in the fi­nan­cial reg­u­la­tory sys­tem should be fixed, mean­ing tighter fi­nan­cial reg­u­la­tion com­pared with the past,” said Yang, who is a mem­ber of the Na­tional Com­mit­tee of the Chi­nese Peo­ple’s Po­lit­i­cal Con­sul­ta­tive Con­fer­ence.

The coun­try’s fast growth in bank lend­ing, of which a part has boosted as­set prices in­stead of sup­port­ing man­u­fac­tur­ing pro­duc­tion or the growth of the real econ­omy, has lifted the lever­age level and fu­eled eco­nomic in­sta­bil­ity, spark­ing con­cerns among po­lit­i­cal ad­vis­ers when they meet in Beijing dur­ing the an­nual ses­sion of the top po­lit­i­cal ad­vi­sory body.

Po­ten­tial fi­nan­cial risks also could be trig­gered in other ar­eas, in­clud­ing the prop­erty mar­ket, thus sev­eral co­or­di­nated poli­cies are needed, Yang said.

“A new hous­ing sys­tem and a long-term mech­a­nism are nec­es­sary to sta­bi­lize the prop­erty mar­ket,” he said. “The prop­erty mar­ket has bub­bles, but the bub­bles can nei­ther be pricked nor con­tin­u­ally in­flated. Leg­is­la­tion is needed to de­velop a healthy prop­erty mar­ket, but the process could be long.”

In terms of mon­e­tary and fi­nan­cial reg­u­la­tory poli­cies, po­lit­i­cal ad­vis­ers ex­pect to hear more from the an­nual Gov­ern­ment Work Re­port, which is sched­uled to be pre­sented on Mon­day.

Some an­a­lysts ex­pect that with sta­bil­ity re­main­ing a key gov­ern­ment ob­jec­tive, pol­i­cy­mak­ers will re­main keen to see growth of credit slow mod­er­ately.

At a group dis­cus­sion of the CPPCC Na­tional Com­mit­tee on Sun­day, Hu Xiao­lian, chair­woman of the Ex­port-Im­port Bank of China and for­mer vice­gov­er­nor of the Peo­ple’s Bank of China, the cen­tral bank, said that although Chi­nese com­mer­cial banks now are un­der pres­sure from non­per­form­ing loan growth, credit sup­ports on the real econ­omy, es­pe­cially for small and medium-sized com­pa­nies, can­not be weak­ened too much.

The growth rate of broad money sup­ply, or M2, which cov­ers cash in cir­cu­la­tion and all de­posits, was up 8.6 per­cent year-on-year in Jan­uary, com­pared with a his­toric low of 8.2 per­cent by the end of De­cem­ber. Yuan-de­nom­i­nated loans in­creased by 12.7 per­cent last year, ac­cord­ing to data from the cen­tral bank.


Yang Weimin, deputy head of the Of­fice of the Cen­tral Lead­ing Group on Fi­nan­cial and Eco­nomic Af­fairs and a mem­ber of the 13th CPPCC Na­tional Com­mit­tee, speaks with re­porters on the side­lines of a CPPCC Na­tional Com­mit­tee meet­ing in Beijing on Sun­day.

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