Saturday 1 October 2016

China aiming to keep yuan stable, lift risk management

Published 29/12/2015 | 02:30

Policy makers aim to ‘strengthen and improve risk management’. Photo: SeongJoon Cho/Bloomberg
Policy makers aim to ‘strengthen and improve risk management’. Photo: SeongJoon Cho/Bloomberg

China's central bank reiterated that it will aim for stability in the yuan as it seeks to promote exchange-rate reform and maintain prudent monetary policy.

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Policy makers also said they would "earnestly strengthen and improve risk management" to ensure financial stability and prevent market risks, in a statement by the People's Bank of China (PBOC) after its fourth-quarter monetary policy committee meeting.

Monetary officials said they will keep moderate liquidity in the financial system.

"It's a reiteration of the PBOC's stance that, given the weakness of the economy, it will keep policy accommodative," said Larry Hu, head of China economics at Macquarie Securities in Hong Kong.

"It makes sense because in the past two months we haven't seen a significant change in the economic data so it's ok to keep some continuity of policy."

The monetary policy committee also reiterated that the central bank will use monetary policy tools flexibly, language that was also echoed this month by the nation's top leaders.

The PBOC last cut interest rates in late October, reducing the benchmark one-year lending rate to 4.35pc from 4.6pc, while also reducing reserve requirements for all banks, to keep the government on track to meet its 2015 growth target of about 7pc for the world's second-largest economy.

After a surprise devaluation of the yuan in August, the PBOC said this month it will use a basket of currencies to value the currency instead of linking it directly to the US dollar.

Meanwhile, the chairman of state-run China Telecom is being investigated for an alleged disciplinary violation, the ruling Communist Party's anti-corruption watchdog said.

The official, Chang Xiaobing, is "suspected of serious violation of discipline", the Central Commission for Discipline Inspection said in a statement on its website.

It did not provide further details. Local Chinese media outlets reported on Sunday that Mr Chang had gone missing.

In a statement China Telecom referred to the anti-corruption watchdog's comments.

"The company currently maintains normal business operations," it added.

Corruption investigations have already included leading politicians, bosses of state enterprises and senior bankers.

The investigation into Mr Chang is unlikely to delay prospects of reforms in China's telecoms industry, analysts said.

(Bloomberg and Reuters)

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