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September 26, 2015

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Finance reform stays to avoid cost rise

CHINA should continue with financial reform because costs will rise if it is delayed, a senior central bank official said yesterday.

Sheng Songcheng, director of the survey and statistics department at the People’s Bank of China, refuted that the recent volatility in stock and currency markets was due to the opening of the country’s capital account as some voices have said.

“It was a result of inadequate and delayed reforms. The slow pace of reform will leave domestic markets vulnerable to global volatility,” Sheng told a financial conference in Shanghai.

“There are no returning arrows once you released the bow,” Sheng said. “We shouldn’t miss the opportunity of financial reform and opening because of market volatility.”

Sheng also noted that China continues to attract long-term foreign capital, and the government still has enough room to unveil economic policies that include fully liberal interest rates and further reform of the foreign exchange market.

He reiterated that the current downward pressure on the yuan was short term in nature and there was no basis for a long-term depreciation, repeating what President Xi Jinping said in an interview with The Wall Street Journal. “China has never allowed the yuan to depreciate at will over the past decade,” Sheng said.


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