Risk management key to guarantee country’s sustainable development

Editor's Note: Xia Bin, a counselor for the State Council, or China’s Cabinet, was interviewed by the China Business Network on risk management of China’s economy last week. Following are excerpts from that interview:

Although China was the only major economy to register positive growth last year, whether it can maintain stable growth, say of 5 percent, in the future depends largely on how it manages certain uncertainties.

While balancing relations between reviving the economy and risk prevention and control, the decision-makers must fully understand the financial risks the country faces, particularly the overall risks.

While dealing with the risks, the decision-makers must keep the big picture in mind and give consideration to the necessity of striking a dynamic equilibrium between reform and development.

In other words, there should be explicit and detailed plans to “dissemble the bombs”, so that the potential harms can be controlled and the impacts on reforms and development in relevant areas can be minimized.

On the one hand, the bottom line of preventing and controlling systemic risks must be defended; on the other hand, the risks should be classified and overcome in a step-by-step manner, while strictly carrying out policies on financial supervision.

The country should get to know about the technologies and industries through which foreign countries can leverage their strengths to seize China by its throat as soon as possible so as to pave the way for giving full play to the synergistic effects while mobilizing national resources and inspiring scientific research personnel to remove bottlenecks, for which the governments at various levels must roll out supporting policies.

The authorities should also continue to carry out prudent financial and monetary policies in a bid to further consolidate the foundation for reforms, and optimize relevant institutions.

At the same time, the central authorities must take resolute action to weed out zombie enterprises, which impact the turnover of currency, the supply of currency and therefore the overall development of the economy.

The policymakers must be clearheaded and be realistic about the renminbi’s current status in the international foreign exchange reserve, and lend suitable support for the euro as well as other international currencies so as to dilute the risks with the US dollar, and expedite the pace of the renminbi’s internationalization. In the foreseeable future, the renminbi looks set to maintain its tendency of weak appreciation.