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Free AccessMNI Insight: PBOC Reacts To Smooth Market Nerves On Trade War
BEIJING (MNI) - The People's Bank of China responded at a prompt pace to
stabilize market sentiment as the trade war between the biggest economic powers
gets real.
Several high-ranking PBOC officials and advisors have made statements aimed
at playing down the effects of a trade war and boost market confidence by
reiterating the capability of the country to cope with any result of US tariffs.
"The impact of U.S. tariff will be limited as the dependence of China's
economy on the outside world is low," Sheng Songcheng, a counselor to the
People's Bank of China who has served at the Chinese central bank for over 20
years, said in comments distributed to MNI over Wechat.
"The tariffs would drag down Chinese exports by 0.75 percentage point,"
Sheng noted, citing research by Chinese Academy of Social Sciences (CASS), a
leading government think tank, stressing "China should keep its strategic
continuity and maintain prudent and neutral monetary policy to prevent risks."
According to American media, President Trump told reporters Thursday the
duties on Chinese goods worth of $34 billion will go forward just after Friday
midnight and another $16 billion of goods could follow in two weeks, suggesting
the final total could eventually reach $550 billion.
Ma Jun, a member of PBOC monetary policy committee and former chief
economist of the PBOC, said in comments to reporters over Wechat "The
implementation of the tariffs would slow Chinese GDP growth by 0.2 percentage
points and China is mulling over necessary measures to support sectors badly hit
to buffer the impact of the trade war."
"The official start of the trade war would not necessarily have a big
impact on capital and forex markets," Ma said, explaining the trade spat has
basically been digested by the market after two months of discussions.
Guo Shuqing, the Party Chief of the PBOC, was a rare strong voice during an
interview with Chinese Financial Times, a newspaper run by the central bank
Thursday.
"The trade war will not be able to proceed," Guo said, "it will not affect
China's own reforms and opening up, and the country is confident going forward."
The chief stressed China's economic fundamentals will dictate the yuan's
trajectory." As an emerging reserve currency, the yuan will tend to be stronger
as a whole," Guo said.
Both stock and forex markets continued their weakness on Friday day. The
Shanghai Composite Index fell 0.34% to 2727.70 in the morning session, while
USDCNY slipped 0.44% to 6.6661 from Thursday's closing price.
The PBOC has not replied MNI's questions on the trade war by Friday noon.
--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com
--MNI Singapore Bureau; +65 8233 2326; email: Asia-Editor@marketnews.com
--MNI Beijing Bureau; +86 (10) 8532-5998; email: sherry.qin@marketnews.com
[TOPICS: MAQDS$,M$A$$$,M$Q$$$,MT$$$$,MX$$$$,MGQ$$$]
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.