PBOC Plans Allowing Foreign Listings, Flags Prudent Policy

  • Further two-way opening of capital account is planned
  • Premier Li says financial industry should support economy

China plans opening measures that may allow foreign firms to list shares in the nation and will continue its “prudent” monetary policy this year, the People’s Bank of China said in its 2015 annual report released Tuesday, echoing recent descriptions of its stance.

The central bank plans financial reforms including further opening up of the bond market and “two-way” opening of capital markets, according to a 133-page report reviewing 2015 and looking into this year. Without giving a specific time frame, it said China plans to allow qualified foreign companies to issue stock on the mainland.

China should coordinate prudent monetary policy and proactive fiscal policy, Premier Li Keqiang said during a seminar at the central bank yesterday, China Central Television reported. Banks should improve their ability to serve the economy, Li said.

The reiteration of a “prudent” monetary policy stance comes after recent economic data suggest a tepid stabilization in the economy, which last year expanded at its slowest pace in a quarter century. The central bank is in the midst of a balancing act, tightening oversight of some financial products and seeking to keep a lid on debt growth while ensuring there’s enough credit supply to keep the economy humming.

That is in line with Li’s comments that the nation should keep reasonable money and credit growth, while gradually lowering the leverage ratio for non-financial companies, according to the CCTV report.

In a written speech included in the report, the central bank’s governor Zhou Xiaochuan said the PBOC will continue to deepen financial reform and opening up in 2016, with special emphasis on assisting with structural reforms such as cutting excess capacity, destocking and deleveraging.

Among other planned policies for 2016, the PBOC said:

  • Monetary policy will be more targeted and more flexible
  • Aggregate financing will see reasonable growth
  • QDII2 trial, which allows qualified domestic individuals to invest in overseas securities, will start at an appropriate time
  • China will research setting up a management policy framework on cross-border capital flows
  • Consumer prices will rise moderately while uncertainties remain

— With assistance by Yinan Zhao

Before it's here, it's on the Bloomberg Terminal.