China's Xi Calls Financial Security Foundation of Stable EconomyBloomberg News
Comments at politburo meeting come amid reglatory crackdown
Financial risks manageable, spillover effects pose threat: Xi
In comments that signaled China’s policy makers may step up efforts to curb debt and fraud amid a crackdown by regulators, President Xi Jinping called financial security the basis of a stable, healthy economy.
Maintaining financial safety is “strategically important” to the country’s economic and social development, Xi said at a meeting of the Communist Party Politburo Tuesday, according to the official Xinhua News Agency. It was a rare occasion for the top policy making body to discuss a specific topic. Officials who attended the group study included the central bank governor and chiefs of the nation’s market watchdogs.
The statement came just as the country’s top leaders said at a separate meeting on Tuesday that they will improve financial support for the real economy, while also stressing preventing financial risks. Chinese banks are pulling back $1.7 trillion source of inflows in response to a series of regulatory guidelines over the past three weeks that put a spotlight on the risks, helping erasing stock market value and sending bond yields to the highest level in near two years.
The government is seeking to reduce financial-system risk by tightening the screws on leverage. The banking regulator said late last week it will intensify steps against irregularities in the financial sector, echoing comments by the securities watchdog just days earlier, while the top insurance official is being investigated on suspicion of “severe” disciplinary violations.
Overall, China’s financial risks can be managed, although spillover effects from other countries may affect the nation’s financial security, Xi was cited as saying. China will control leverage ratio and conduct comprehensive checks on financial markets and Internet finance, he said.
Zhou Xiaochuan, governor of the People’s Bank of China, Guo Shuqing, chairman of China Banking Regulatory Commission, Liu Shiyu, chairman of China Securities Regulatory Commission, Chen Wenhui, vice chairman of China Insurance Regulatory Commission were among those who attended the group study and talked about their understanding on ensuring financial security, according to Xinhua.
— With assistance by Winnie Zhu