Risk control given priority as part of drive
Efforts to slow down the growth of China's leverage ratio have achieved "initial results," reflecting a commitment to carrying out financial reform, the Xinhua News Agency quoted a government official as saying on Monday.
"The country has prioritized controlling financial risks in its government work, which translates to stabilizing economic growth and deleveraging in monetary policy terms," Yi Gang, vice president of the People's Bank of China (PBOC), the country's central bank, said at a dialogue between Chinese and U.S. business leaders and former senior officials in Beijing. The two-day event concluded on Wednesday.
The first step in deleveraging is "to decelerate the growth of the leverage ratio," Yi was quoted as saying in the report.
M2, a broad measure of money supply that covers cash in circulation and all deposits, only expanded 9.6 percent year-on-year in May. The number slowed for a fourth straight month, providing evidence for the initial results of financial reform.
Yi pointed out that the yuan's exchange rate mechanism has become more flexible and is moving toward a market-oriented manner.
Effective on October 1, 2016, the yuan was added to the basket of currencies that make up the Special Drawing Rights reserve currency of the IMF.
Yi pointed out that China had launched the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect programs and that the foreign exchange and banking sectors had further opened up to foreign investors, signaling that the country's capital market was on the way to integrating with the global one, according to the report.
"All of these are the results and achievements of China's ongoing opening up of the financial market," Yi was quoted as saying in the report. He also noted that the nation will continuously enforce the principle of "pre-establishment national treatment plus a negative list" in managing the opening up of the financial market.
Yi dispelled foreign investors' concerns about China's commitment to reform and opening-up.
"China's economy is at a crucial stage of growth and development, which prompts the country to focus more on opening up," he said.
"In the future, we will deepen reforms and give market factors a decisive role in resource allocation," he noted.