Monetary policy remains prudent, say PBOC officials

Bloomberg

Senior People’s Bank of China (PBOC) officials pushed back against interpretations of its recent moves as signalling significantly looser policy, emphas- ising that monetary policy remains prudent — though it will be more targeted and flexible.
“The stance on prudent monetary policy hasn’t changed,” Sun Guofeng, director of the monetary policy department, told reporters in Beijing. “But it’ll be more appropriate in tightening or loosening because the situation is complex, and policy reactions should be more forward- looking, flexible and targeted.” Policy makers won’t “flood” the economy with excessive liquidity, he said.
The country’s top leaders have pledged to keep monetary policy prudent while striking an “appropriate” balance between tightening and loosening in 2019, dropping the “neutral” description. The new language, coupled with moves to boost private-sector funding, prompted some economists to predict cuts to bank reserve-ratio requirements or benchmark interest rates next year.
Leaders also made no reference to the yuan in the statement after their annual economic policy meeting this month, removing last year’s reference to keeping the exchange rate “basically stable at a reasonable and equilibrium level.”
The omission “doesn’t represent any changes to policies,” Sun said, and the statement couldn’t include all topics as space was limited. He added that officials took note of the discussion among analysts and investors about the dropped clause and ensured that a separate statement released this week after the monetary policy committee’s quarterly meeting included the language on exchange rates.
Despite earlier easing measures, the world’s second-largest economy still faces challenges of sluggish investment, weak consumption and the continuing trade war with the US. The expansion is inevitably slowing as it transitions from a high-gro-wth, export-led model to greater consumer focus and more moderate growth. Amid that change, economists surveyed by Bloom-berg project 6.2 percent gross domestic product growth in 2019, the slowest since 1990.

China to hasten approvals for foreign firms
Bloomberg

China will speed up approvals for securities firms and fund-company joint ventures in which foreign investors have majority stakes, a senior official said, another sign that policy makers are pressing ahead with efforts to open up the country’s financial system.
The comments were made by China Securities Regulatory Commission Vice Chairman Li Chao, according to the China Securities Journal.
Li also said China must hasten to open up its capital markets, create globally competitive banks, and improve stock-trading links with Hong Kong.
Chinese officials have repeatedly stressed their determination to open up their $45 trillion financial industry, despite trade tensions with the US. In the past month, UBS Group
AG became the first foreign entity to win control of a local joint venture since China said it would ease ownership rules in 2017.