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BEIJING (MNI) - The Chinese yuan will stay in a range around 7 to the
dollar with both upward and downward fluctuations as it is supported by economic
fundamentals as the country recovers from the coronavirus outbreak, Chen Yulu, a
deputy governor of the People's Bank of China, said at a press briefing Sunday.
China supports multi-national organizations including the G20 and the
International Monetary Fund to coordinate policies and crisis supports, Chen
added after being asked whether China would join coordinated actions by central
banks such as the liquidity swap line set up to increase dollar liquidity.
PBOC Governor Yi Gang had spoken to Federal Reserve Chairman Jerome Powell,
along the heads of IMF and Bank of International Settlements, Chen said, without
divulging details of the discussions.
Chen was joined by Vice Chairman of the China Securities Regulatory
Commission Li Chao, China Banking and Insurance Regulatory Commission Vice
Chairman Zhou Liang and Xuan Changneng, deputy head of the State Administration
of Foreign Exchange.
- China's monetary policies will be more flexible, while M2 and social
financing will expand at a pace in line with "or even slightly higher" than
nominal GDP growth, Chen said. The central bank will target support at small
business lending, use capital injection and bonds to boost medium- and
small-sized banks and raise their willingness and capacity for lending, he said.
- Inflation will gradually decline in Q2-Q4 as production recovers, Chen
- It is "too soon to judge" whether the world has entered a financial
crisis, as one needs to see whether markets experience an extended decline,
whether there have been closures of systemically important financial
institutions and whether the real economy sustained great damage, Chen said.
- China's economy has stabilized, and it has the strong credit market and
forex reserves to guard against the potential spread of global financial
turbulence, Chen said.
- About CNY20 billion overseas capital left China this year, not enough to
cause overwhelming and fundamental impact. China's stock market faces less risks
due to lower valuations, with the P/E ratio of the Shanghai Composite Index at
less than 12; liquidity is also sufficient, said CSRC's Li.
- SAFE eased controls on cross-border capital raising to allow companies to
borrow more from outside China, Xuan said. The so-called macroprudential
parameter was raised to 1.25 from 1, allowing wider access to tens of billions
of dollars more foreign funding, but the policy isn't available to local
government financing vehicles or property companies, said Xuan.
- The CBIRC will further dissolve shadow banks and curb high-risk lending,
prevent property market speculation, Vice Chairman Li said.
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