A senior figure from China’s central bank has reiterated the country’s commitment to further liberalisation and opening of its financial sector in future.
During a speech delivered at the Ninth US-China CEO and Former Senior Officials’ Dialogue held in Beijing, People’s Bank of China vice-governor Yi Gang said that reform and opening were the the necessary path for maintaining the stable and healthy development of the Chinese economy.
Yi noted that the Chinese economy is currently passing through a critical transition phase, which will necessitate further reform and opening of key areas of the economy such as financial markets.
“With respect to China’s determination to reform and open, some of our foreign friends have raised several concerns,” said Yi. “In actuality, China’s economic growth and development is currently at a critical moment, and we are placing even greater emphasis on reform and opening.
“China will continue to walk firmly along the road of reform and opening. Our product markets already essentially implement market pricing, and in future we will further enable markets to play a more decisive role in the allocation of resources via greater reform of markets for key factors.”
According to Yi China has already completed the process of interest rate liberalisation, and is continuing to pursue liberalisation of exchange rates, improving pricing mechanisms and making them more flexible.
With respect to China’s ongoing deleveraging campaign, Yi said that regulators had “put the prevention of financial risk in an even more important place,” and that from a monetary policy perspective it would be important to focus on balancing stabilisation of growth with prevention of latent leverage-related risk.
Yi said that regulators were focusing on three key areas during the process of China’s economic transition, the first of which is the shift from an export and investment driven economy to a consumption driven one.
“The drivers of economic growth will increasingly come from consumption and from internal demand,” said Yi. “This is an extremely important hallmark of structural adjustment to the Chinese economy.”
While consumption contributed 48% to China’s economic growth in 2013, last year this figure had increase to approximately 65%.
A second area of focus is the rising role of the tertiary sector in China’s economy,with the service sector’s share of GDP increasing by over 1 percentage point on average over the past several years to surpass manufacturing and currently account for over 50%.
A third area is further moderation of China’s balance of payments, with its current account surplus falling from approximately 10% of GDP to 1.8% last year.
“This is internationally accepted as an appropriate level,” said Yi, who expects the figure to potentially drop beneath 1.8% in 2017.