Chinese finance minister rules out central bank help in local government debt-for-bond swap
Finance minister rules out central bank aid, saying local government debt conversion programme will be based on demand
The mainland's trillion-yuan (HK$1.26 trillion) local government debt-for-bond swap programme would be carried out based on market demand with no help needed from the central bank, Finance Minister Lou Jiwei told the South China Morning Post yesterday.
Lou's comments indicate that a much-anticipated Chinese version of quantitative easing, similar to the US policy of massive bond purchases by the central bank, is not on the cards.
The bond swap programme is part of the ministry's ambitious plan to better regulate risks in local government debt and ease local authorities' fiscal spending burden.
People's Bank of China Vice-Governor Yi Gang declined to comment when asked if the central bank would coordinate the local debt swap programme with the finance ministry.
Meanwhile, Lou told a conference yesterday marking the 20th anniversary of cooperation between China and the OECD that the leadership had full confidence in coping with a domestic economic downturn. He cited Beijing's successful handling of runaway inflation rates in 1993 and its ability to keep the yuan stable during the Asian financial crisis as well as its deft engineering of Hong Kong's transition.
In a step signalling greater Beijing participation in setting global rules and building closer ties with the OECD, Vice-Premier Wang Yang announced at the event that China was willing to join the organisation's Development Centre.