More on developments in China over the weekend - 5 big takeaways

Author: Eamonn Sheridan | Category: Central Banks

I posted earlier on the China National Financial Work Conference

The meeting is a big deal, its held only once every five years and while it is being overshadowed by the 19th Communist Party Congress coming up in the autumn there were some significant developments to come out of it

"Xi's decision to ramp up the regulatory powers of the PBOC and to establish a commission to oversee financial stability and development reflects the increasing financial sector vulnerabilities in the Chinese financial system," said Rajiv Biswas, Asia-Pacific Chief Economist at IHS Markit in Singapore. "The Chinese government wants to prevent a financial crisis in China that could create shock waves in the domestic economy and create a rising risk of social unrest."
  1. "Tighter, more-centralized regulatory powers -- if that's what this will really mean -- under the PBOC are welcome"
  2. the meeting reinforced the PBOC's central position in the "modern financial regulation framework," and its role in defending against risks was emphasized
  3. a more conservative attitude toward financial opening-up has come out of the meeting
  4. meeting also signaled that ongoing deleveraging in the financial sector could expand into the broader economy, with the debt of state-owned enterprises as the first priority. 
  5. The statement said China should "firmly take prudent monetary policy," omitting the "neutral" word top policy makers adopted late last year