Premier Li Keqiang Assures Financial System is Under Control even with Government Intervention
According to China’s premier Li Keqiang the country’s financial system is now under control and reforms will not be stop even with the intervention of the government. Keqiang told heads of financial institutions during a meeting that the government will not stop credit lines for businesses during temporary difficulties when their market outlook is good since this indicated a further loosening of liquidity even if the government sticks to its prudent monetary policy. The government also pledged to ensure reasonable sufficient liquidity and a reasonable expansion of credit loans and to push forward the internationalization and liberalization of the renminbi along with other financial reforms.
Doubts on whether financial reforms will stop even after the disturbance in the stock market the answer is no, since financial reforms and the opening up is carried out continuously and steady in improving China’s overall global competitiveness. China’s stock market stumbled by 40 percent in the summer, prompting the government in stepping in and uses multiple intervention measures. Speculations after stated that these measures hit a blow in the market oriented financial reforms. But without these measures more rippling effect in sectors other than the stock market can be seen further more a stable financial system is one of the preconditions of future reforms. But still they have to follow a market-oriented path as they have to restore market functioning under the premise of financial stability and there are ups and downs in the market.
Li said that the meeting is to solicit suggestions and listen to complaints from several leaders of financial institutions and the government is preparing policies after the release of quarterly economic data. China is planning to issue yuan dominated bonds in London its first offshore sales of the renminbi outside China as they are seeking a bigger role for its currency in the global trade and finance. China already posted a cooler than expected producer price index last month showing further deflationary pressures, overall the weak PPI focuses the severe over capacity problem and slow domestic investment demand and given the lackluster in the growth outlook experts continue to see a moderate fiscal stimulus coming from the central government to continue monetary easing.