One of the Chinese government’s senior-most financial authorities has warned against reversing the ongoing deleveraging efforts of regulators just for the purpose of propping up economic growth.
Yang Weimin, vice-chairman of the Office of the Financial Work Leading Group of the CCP, said that leverage was a source of risk that needed to be effectively addressed in the second half of 2017, and that China could not rely on ongoing gains in debt levels to guarantee growth.
“In terms of work in the second half…the direction of deleveraging cannot be changed,” said Yang. “Deleveraging is a long-term process, as each sector and industry has different levels of leverage.”
Yang’s remarks come hot on the heels of China’s National Financial Work Conference, where President Xi Jinping declared that the deleveraging of the country’s state-owned enterprises as the “priority of priorities.”
Yang made the remarks at an official press conference held jointly with the National Development and Reform Commission and the National Bureau of Statistics at the State Council Information Office for the purpose of providing an assessment of China’s economic conditions in the first half of 2017, as well as an outlook on policy work for the remainder of the year.
In addition to the deleveraging of the market, other areas of focus for China’s policymakers in the second half of the year would include curbing local government debt risk, pragmatically addressing problems with the financial sector, and stabilising real estate markets.
Yang said that the Chinese economy continued to suffer from problems despite its strong performance in the half of 2017, including the huge challenge of preventing and disposing of financial risk, ongoing failure to establish effective long-term measures for guiding the real estate market, and rising corporate funding costs.