China has introduced new measures to shore up market sentiment as overseas investors become increasingly suspicious about the country’s handling of multiple headwinds. The Financial Development and Stability Committee (FDSC), headed by Vice-Premier Liu He, held a special session on Friday morning to deliver a message from the country’s top leadership, according to a three-sentence statement released by the China Securities Regulatory Commission that did not provide further details. Instead, the securities regulator said it had analysed “sensitive issues” in its own meeting the same day and had studied countermeasures and reserve policies. “We must promptly respond to market concerns, guide their expectations, improve their potential and resilience to promote the steady operation of the capital market,” it said. Risks to yuan ‘skewed towards further weakness’ amid economic disruption In a meeting on March 16, Liu pledged to “actively release policies favourable to markets” and encouraged long-term institutional investors to increase their shareholdings. The FDSC meeting on Friday came after many investment banks slashed their China growth forecasts on worsening March data and the Shanghai lockdown. Foreign investors have also slashed their bond, equity and yuan holdings. The yuan-US dollar exchange rate retreated to a one-year low this week, while the benchmark CSI 300 index, which tracks the largest listed companies in Shanghai and Shenzhen, plunged to the lowest level since June 2020. The People’s Bank of China (PBOC), the China Banking and Insurance Regulatory Commission and the State Administration of Foreign Exchange also met on Friday to assess the situation and pledged more support. Uncertainty is rising. The Russia-Ukraine conflict poses a new challenge to the global economy, while the pandemic outbreak has disrupted logistics and supply chains in some regions People’s Bank of China “Uncertainty is rising. The Russia-Ukraine conflict poses a new challenge to the global economy, while the pandemic outbreak has disrupted logistics and supply chains in some regions,” the central bank said on its website. The central bank said it would maintain a reasonable level of market liquidity and push forward the lowering of financing costs. It also promised to provide an accommodative monetary and financial environment for both pandemic control and economic development. The central bank announced a lower-than-expected cut of the reserve requirement ratio for commercial banks last week, but held policy rates and the loan prime rate. The decision was largely attributed to its worries about the capital outflow triggered by more rate rises from the US Federal Reserve. PBOC governor Yi Gang made a similar statement, saying the primary objective of China’s monetary policy is to s tabilise prices and employment. The banking and insurance regulator, which supervises more than 360 trillion yuan (US$55.47 trillion) of financial assets, said it would increase support for market entities hit hard by the pandemic, and meet the demands of new urban residents for financing to set up businesses, buy homes and pay for education and medical care. Meanwhile, it will coordinate the pace of local government bond issues to support key construction and infrastructure projects. China sees ‘unprecedented’ capital outflows after Russia invades Ukraine The Chinese authorities set an annual growth target of “around 5.5 per cent” in March, weeks before the Omicron-fuelled coronavirus outbreak in Shanghai and other major cities caused severe economic disruption. The International Monetary Fund on Tuesday lowered its 2022 China growth forecast from 4.8 to 4.4 per cent, while slashing its global growth estimate by 0.8 points to 3.6 per cent. In his address to the Boao Forum for Asia on Thursday, President Xi Jinping told global investors that the world’s second largest economy had good fundamentals, a lot of room to manoeuvre, strong resilience and great development potential.