BEIJING (Reuters) - China’s leaders are confident the country can cope with major and external risks, they said at a high-level internal financial meeting, amid financial turbulence at home and rising trade tensions with the United States.
The cabinet-level Financial Stability and Development Commission (FSDC), convened by Vice Premier Liu He for its first meeting, concluded on Monday that China’s structural deleveraging was progressing in an orderly way and financial irregularities had been curbed.
“High-risk financial operations have shrunk and some institutions have toned down their barbaric expansionary behavior,” the government said in a statement posted on its official website on Tuesday.
The statement also confirmed an exclusive Reuters report that Liu was going to be head of the FSDC, which is expected to help improve supervision and coordination among regulators and the central bank as the world’s second-largest economy enters the third year of an official crackdown on shadow banking and risky lending.
The FSDC said overall financial operations were stable, and the Chinese economy was resilient with many “favorable conditions” to fend off major and external risks, without detailing the conditions.
“The massive domestic market gives ample space as a cushion,” it said.
Ma Jun, a member of the monetary policy committee of the People’s Bank of China (PBOC), said he expected structural deleveraging to be the focus in the near future.
“Regulators will focus more on structural deleveraging in the future and avoid excessive use of ‘clean-cut’ deleveraging measures,” he said in a statement released by the central bank on Tuesday.
Ma said the establishment of the FSDC would ensure better regulatory coordination to avoid scenarios in which individual measures by different regulators drained market liquidity and triggered market panic.
The Chinese currency CNY=CFXS and equity markets have been on edge ahead of July 6, when U.S. tariffs on $34 billion worth of Chinese goods kick in. Beijing has said it would retaliate with tariffs on U.S. products.
China’s central bank moved to calm jittery financial markets on Tuesday after the yuan dropped through the psychologically significant 6.7 to the dollar mark, hitting its lowest in almost a year as anxieties over U.S. trade frictions deepened.
China’s central bank governor Yi Gang is the vice head of the FSDC, according to the statement.
Reporting by Beijing Monitoring Desk; Writing by Yawen Chen in Beijing; Additional reporting by Twinnie Siu in Hong Kong; Editing by Nick Macfie