- IMF said to give China guidance on central bank communications
- N.Y. Fed officials came to Hangzhou for first joint symposium
As the People’s Bank of China’s campaign to step up communications makes strides, one of its research chiefs muses that one day the central bank might have its own version of the annual economic gathering at Jackson Hole.
For the first time, the PBOC held a joint symposium with the Federal Reserve Bank of New York this week in Hangzhou, near Shanghai. Central bank officials discussed economic developments and even mingled with reporters, something rare in China.
In another sign of openness, the PBOC also recently heard guidance from the International Monetary Fund on improving communication, according to two officials who asked not to be identified as the talks were private.
While the central bank, which lacks the kind of independence enjoyed by counterparts, has steadily increased the publication of statements and explainers, criticism erupted over unexpected currency moves since August. PBOC Governor Zhou Xiaochuan appeared to respond last month with a speech, panel discussion, an extensive local media interview and a press briefing ahead of a Group of 20 meeting.
By Tuesday, when PBOC Deputy Governor Chen Yulu and New York Fed President William C. Dudley led the Hangzhou conference that was years in the making, public criticism of China’s policy handling had eased. Chen made the point that cooperation between the central banks of the world’s two largest economies is increasingly important and that coordination should be improved.
As officials rubbed shoulders with each other and -- to the occasional consternation of handlers -- with reporters, Yao Yudong, one of the PBOC’s research chiefs and the organizer of the Hangzhou gathering, hinted at something bigger.
“The U.S. has a Jackson Hole, why can’t China?,” Yao told Bloomberg, emphasizing that it was his view and not the PBOC’s official position. “We can have a conference that evolves into that in the future,” he said, referring to the Fed’s symposiums.
The conference arose from a desire to form a closer working relationship between the two staffs, and Dudley and Zhou expect to continue sponsoring the conference jointly in the future, according to a person familiar with the thinking within the New York Fed.
Central bank communication the world over is a kind of monetary policy in itself, helping guide market expectations to aid policy transmission. With China changing the way it manages its currency and re-inventing its monetary tools, the need for clearer messaging has sharpened.
While Zhou was largely silent on policy late last year, there were improvements on other fronts. PBOC Research Bureau Chief Economist Ma Jun, a former chief China economist for Deutsche Bank AG, emerged as a key voice providing context on policies.
"Some Chinese officials aren’t accustomed to communicating with markets before a policy is issued as their mindset comes from the era of a centrally-planned economy," said Dong Xiaojun, an economist at the Chinese Academy of Governance, a research and training institute in Beijing. They’re trying, but still have a long way to go, she said.
During the two-day gathering at the Shangri-La Hotel on the shore of Hangzhou’s famed West Lake, security staff tried to shoo away reporters who approached Deputy Governor Chen. Though he didn’t seem to mind the questioning, he left shortly after.
That’s in contrast to the relaxed atmosphere at Jackson Hole, where for three decades central bankers, economists and academics from around the world have convened each August to discuss monetary theory. Mornings are spent discussing topics like wage dynamics or financial regulation; come afternoon, and outdoor group activities take over.
Former Fed Vice Chairman Don Kohn was known for leading lengthy mountain hikes in the Grand Tetons, and other Fed officials like to fish or take a river rafting trip. All events are open to reporters, and all proceedings are recorded, transcribed and published in a book.
There was no such conviviality on display in Hangzhou. Some panel discussions were closed to press, though reporters were able to participate in the five-course dinner featuring roast pork ribs and lunch with West Lake vinegar fish, a regional specialty.
The European Central Bank started its own annual forum in 2014 in Sintra, Portugal. The first two gatherings discussed topics including inflation and unemployment. Attendees last year included ECB President Mario Draghi, Bank of England Governor Mark Carney and Fed Vice Chair Stanley Fischer. It too includes reporters.
Policy makers in Beijing should communicate better, and "we’re learning," Fang Xinghai, vice chairman of the China Securities Regulatory Commission, said during a panel discussion in January at the World Economic Forum in Davos, Switzerland. "Our system isn’t structured in a way that’s able to communicate seamlessly with the market."
The real problem is a difference in communication style, according to Zhang Jun, director of the China Center for Economic Studies at Fudan University in Shanghai. The PBOC recognizes the disconnect and is working to prevent more misunderstandings, Zhang said.
"China’s leaders have plenty of challenges ahead, and improved communication with markets could help them overcome those," Zhang wrote in comments in the official China Daily this week. "China’s leaders recognize this imperative, and are working to meet it."
— With assistance by Xiaoqing Pi, and Heng Xie