MNI: PBOC Chief Stresses More Openness and Risk Controls

     BEIJING (MNI) - China's new central bank chief, Yi Gang, who was assigned

the the post earlier this month, said at a forum on Sunday that China will

further open its financial sector, while risk controls need to keep pace with

further openness.

     At the forum, which was held by the Development Research Center of the

State Council, an official think tank managed by the governing State Council, Yi

said mutual openness of financial markets needs to be enhanced. He stressed more

openness of China's market will bring progress and could make Chinese financial

sector more competitive.

     INCREASED OPENNESS DOES NOT MEAN LOOSER REGULATION

     Yi said reducing market restrictions for foreign investment does not mean

China wants to loosen regulation on the financial sector, adding that the

government will treat foreign investors and their Chinese counterparts equally,

and continue to strictly control financial risks. To what extent China will open

its financial markets depends on its regulatory capability, he said.

     Prudent and neutral monetary policy is necessary for improving financial

institutions' ability to serve the real economy, Yi said. China will further

advance internationalization of the yuan, and let its reform of the exchange

rate system and capital account convertibility coordinate with each other, he

added. 

     CAPABLE OF WITHSTANDING SHOCKS

     China is fully capable of withstanding shocks to its economy from other

countries, Yi stressed, owing to the country's banking, securities and insurance

markets' stability as well as effective government supervision.

     Indebtedness of the whole country, which has been growing relatively fast,

has to be stabilized through market-based methods and debt to equity swaps, Yi

said. At the same time, China would maintain reasonable growth of its M2, loans

and total social financing, he said.

     He also pointed out derivatives and related products, which are far from

making contributions to the real economy, could be further regulated, and said

"I will prioritize the real economy."

--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com

--MNI Singapore Bureau; +65 8233 2326; email: Asia-Editor@marketnews.com

[TOPICS: MMQPB$,M$A$$$,M$Q$$$]