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By Archie Zhang
BEIJING (MNI) - China's campaign to push lenders to support the real
economy in the hope of boosting growth carries risks, Wu Xiaoqiu, an influential
Chinese economist and vice president at Renmin University, said Saturday.
Top-down administrative pressure to give life-support to ailing industries,
such as coal mining, places banks at greater risk and violates free market
principles, Wu told a conference at the school , an institution that serves as a
think tank to policymakers.
Finance can help the economy, but it shouldn't be relied on to salvage it,
Wu said. Turning the "finance must service the economy" campaign to a political
mission is unsound, he said.
A government campaign to force banks to promote green finance over the last
few years is yet another example of an ill-advised policy, Wu said.
China's regulators need to further raise controls over listed companies and
rating agencies, Wu further said. China has many AAA-rated companies, yet their
bonds often have to high pay interest rates, contradicting their top-rated
credit standings, Wu said.
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