China’s Central Bank and Foreign Exchange Authority Stress Targeted Disposal of Grey Rhino Risk in Key Sectors

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The People’s Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) have outlined focal areas for cooperative regulatory and policy work between the two authorities in future.

On 11 March PBOC chief and party secretary Yi Gang (易纲) convened a special study meeting of PBOC’s party committee and SAFE’s party theoretical study team, to outline the following focal ares for policy work in future.

  1. Further deepen understanding of international and domestic financial conditions. “PBOC and SAFE must strengthen analysis of macro-economic financial trends, closely focus on changes to the operation of financial markets, and provide technical support to scientific decision-making by the party and the formulation of measures by the head bank.”
  2. Further correctly grasp the intrinsic nature of finance. “PBOC and SAFE must fully apprehend the interrelated nature of finance and the real economy, and [the fact that] servicing the real economy is our natural function. Current deepening of financial supply side structural reforms must focus on vigorous clearing out of monetary policy transmission mechanisms and results, actual implementation of stable monetary policy, the use of myriad strategies and tactics to resolve the problem of inadequate financial services for private enterprise and small and micro-enterprises and inadequate service innovation in fintech; and the creation of financial infrastructure for financial markets, payments and clearing, credit systems, fintech and foreign exchange management.”
  3. Further balance the relation between stable growth and risk prevention. “PBOC and SAFE must deepen its understanding of the key discourse that ‘the healthy growth of the real economy is the foundation for the prevention and disposal of risk.’ [We] must focus on risk prevention and the strengthening of the counter-cylical adjustment role of monetary policy on a foundation of stable growth.”
  4. Targeted and effective disposal of risk in key areas. “[We] must focus on the resolution of ‘grey rhino’ risk in key areas, as well as focus on the prevention of abnormal volatility risk in financial markets. In 2019 we must firmly continue to prosecute the war for the prevention and dissolution of major risk, engage in the targeted disposal and dissolution of various forms of risk and hidden hazard, and firmly guard the baseline against the onset of systemic financial risk.”
  5. Further deepening of financial reform and opening. “The firm and unwavering expansion of financial opening is our established policy…[we must] continue to drive external opening of the financial sector. The urgent matter is full implementation of financial reforms and financial opening tasks that have already been arranged. At the same time we will research and promote new reform and opening measures based on changes to international economic and financial development circumstances and the needs of China’s development strategies.”
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