Zhou Xiaochuan: China a Greenhorn in Spurring Domestic Demand
Zhou Xiaochuan, governor of the People’s Bank of China, said in his closing speech at the 2009 Caijing Annual Conference that as China has focused for so many years on expanding production, it lacks experience in stimulating domestic demand. When talking about the lessons to be learned from the global financial crisis, Mr. Zhou held that all crises as a result of bubbles in particular sectors can be reduced to insufficient adjustment of both macro- and micro economies. He suggested introduction into the microeconomic sphere of counter-cyclical policies.
Chen Deming: No RMB Devaluation
China’s commerce minister confirmed that there would be no devaluation of the RMB to boost exports, and called on all countries to work towards stabilizing the international foreign exchange market. Chen endorsed the Renminbi exchange rate regime, saying that it reflects changes in the demand-supply relationship in the market. “The appreciation of the yuan in recent years has enhanced China’s efforts to correct its international payment imbalance and transform its mode of foreign trade development.” The Renminbi gained, although at a slow pace, against the US dollar in the second half of 2008, and most other world currencies. This is the natural result of shifts in the demand-supply relationship in the market. Mr. Chen pledged that China would continue to ameliorate its Renminbi exchange rate regime, and keep the rate comparatively stable on a rational equilibrium.
Yu Faming: 24 Million Chinese Job Seekers
“The destructive effect of the financial meltdown on employment is spreading to more regions,” chief of Employment Promotion Department of the Ministry of Human Resources and Social Security Yu Faming said. “The outlook for the labor market in 2009, when approximately 24 million people will be looking for work, is bleak.” Job seekers comprise two main groups: 13 million urban residents entering the labor market for the first time; and eight million laid-off workers. “Employment priority will be given to graduates and needy urban residents,” Yu Faming said. The 6.1 million graduates that enter the labor market from Chinese universities in 2009 will push the total number of job-seeking graduates to more than seven million.
Liu Mingkang: Lend Wisely
Liu Mingkang, chairman of the Banking Regulatory Commission, recently warned Chinese banks to remain vigilant in matters of credit. Loans should only be made to help corporate borrowers with sound management and a technical edge out of temporary financial difficulties, and not to companies in a financial morass. Liu urged banks to adhere to the principles of prudent and healthy development in their operations. “The speed of growth is subject to the quality of growth,” Liu said. The banking business should keep a discreet distance from the capital market to avoid mutual risk transmission. Liu stressed that banks must remain on the alert in the process of advancing their opening- up and reforms to risks on both domestic and international markets.
