China’s opening up of financial markets won’t be a smooth ride, official says
Beijing is committed to the reform of its financial sector, but external risks and domestics priorities mean the process could be bumpy
The process of opening up China’s financial markets to foreign firms will not be smooth as it is subject to disruption from external factors and the need to protect the domestic economy, a senior government official said on Saturday.
Speaking at a conference at the Renmin University of China in Beijing, Lu Lei, the deputy head of the State Administration of Foreign Exchange, said that reforms would proceed gradually, as domestic concerns would always be prioritised.
“There will be a continuous flip-flop in the process because finance, unlike other sectors, always encounters problems, such as cyclical crises,” he said.
Despite having to battle a trade war with the United States, China remains under pressure to open up its financial markets. But it is also dealing with rising financial risks at home, including a possible bubble in the online lending sector.
Risk control, particularly within financial system, is one of three priorities outlined by President Xi Jinping for the next three years.
“The basis judgment is that we are still in a risk-prone period,” Lu said. “Although there’s no outbreak of systematic risk, problems are accumulating, while [financial] interconnection and complexity are rising.”
The former head of research at the People’s Bank of China (PBOC) said the financial landscape in China was quite different from 10 years ago.