The People’s Bank of China insisted that it is holding a neutral stance in monetary policy, just days after it announced the second round of liquidity injections in two months.
At its quarterly meeting on Wednesday, the monetary policy committee hailed the results achieved so far by the bank’s neutral policy stance, and said that deleveraging and the country’s emphasis on controlling systemic financial risk is starting to have an impact.
The policy panel said it will closely manage the supply of money and ensure there is a reasonable level of liquidity. The PBOC has a range of policy tools available, said the committee, promising it will carefully control the pace and force of deleveraging in order to promote the steady development of the economy.
This is the committee’s first meeting after a reshuffle earlier this month which officially made Yi Gang chairman of the committee, replacing Zhou Xiaochuan, his predecessor as governor of the PBoC.
There will be no cap on foreign ownership in asset management, futures, insurance, and securities joint ventures by 2021, according to a new negative list which details restrictions for foreign investment in various sectors. It was published by the National Reform and Development Commission (NDRC) on Thursday.
The NDRC also loosened its grip on banks. Previously, a single foreign institution was not allowed to own more than 20% of a Chinese bank, and total foreign ownership could not exceed 25%. Both bars are now removed.
Financial regulators have started making the move to remove foreign ownership caps, a policy first set out by Beijing last November. In April, president Xi Jinping said he wants to see this policy implemented as soon as possible.
Liu He, the Chinese vice premier and chief economic tsar, cautioned that escalating trade tensions could draw the world into a recession. He made the comments at the conclusion of the seventh China-European Union High-level Economic and Trade Dialogue, which was held on June 25.
“The dialogue was held against a very special backdrop when unilateralism and trade protectionism is on the rise and tensions appear in the economic relations between major countries,” he said. “Both sides [China and the EU] agreed to firmly oppose unilateralism and protectionism and prevent such practices from impacting the world economy or even dragging the world economy into recession.”
Liu said the two sides agreed to defend the multilateral trading system, with the World Trade Organization at its core, and promote inclusive and mutually-beneficial economic globalisation. China and the EU also agreed to greater co-operation in the financial sector, as well as resolving issues in market access in trade and investment, Liu added.
The vice premier’s comments came shortly before Donald Trump, the US president, told media that he will use a national security vetting process to prevent Chinese companies, among others, from acquiring American technologies.
China may soon allow pension funds to invest in offshore securities, a June 21 report by Economic Information Daily, a Xinhua publication, has said.
The Ministry of Human Resources and Social Security is considering the plan, Tang Jisong, head of the supervision bureau at the ministry, told the publication.
“[Pension funds’] investments are restricted to the onshore market,” Tang said. “Internationally, allowing offshore investment has been an efficient option in diversifying risk and enhancing yields.”