China confident of managing financial risks
Print Edition
Premier Li Keqiang yesterday expressed strong confidence in China’s ability to prevent systemic risk.
“We are fully capable of forestalling systemic risk,” Li said when delivering a government work report at the opening meeting of the annual parliamentary session, citing sound fundamentals of the Chinese economy and the many policy tools at disposal.
China’s economic and financial risks are on the whole manageable, Li said. “What China needs to do is to tackle both the symptoms and root causes and take effective measures to defuse potential risks.”
Li vowed a serious crackdown on unlawful activities, such as in illegal fundraising and financial fraud.
“The country will strengthen coordination in financial regulation, improve regulation over shadow banking, Internet finance, and financial holding companies, and further improve financial regulation,” the premier said.
He stressed forestalling and defusing the local government debt risk.
“All forms of borrowing and debt underwriting that violate the law and regulations are strictly prohibited. Provincial-level governments should assume overall responsibility for debts incurred by local governments within their jurisdictions; governments below the provincial level should live up to their own responsibilities; and all must take active, prudent steps to deal with outstanding debt,” the premier said.
Li promised to improve the standard mechanisms for local governments to secure financing, noting that this year, local government special bonds issued would total 1.35 trillion yuan (US$213 billion), up 550 billion yuan year on year.
The special bonds will “be used as a matter of priority for financing the smooth implementation of ongoing projects; and the scope of the use of special bonds will be appropriately expanded,” he said.
This year marks the 10th anniversary of the 2008 global financial crisis. Prevention of financial risks is key for China to win what policymakers called the “three critical battles,” namely controlling risks, reducing poverty and tackling pollution.
Last July President Xi Jinping called for stronger financial regulation to contain risks at a National Financial Work Conference.
“Guarding against systemic financial risks is the eternal theme of financial work and the government should take stronger initiative to monitor, warn against and deal with risks in a timely manner,” Xi said.
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