MNI POLICY: China Must Watch Global Easing Spillover Effects

China should be aware of the spillover effects of global monetary easing as past experience shows financial crises in emerging markets are often related to a tightening of policy in developed countries, Zhang Xiaohui, the dean of PBC School of Finance at Tsinghua University and former assistant governor of the People's Bank of China said Wednesday.

The sheer scale of easing across the developed world has led to unprecedented flows into emerging economies, Zhang told the Financial Street Forum on Wednesday, noting that the fast depreciation of China's Yuan over the last 5 years was triggered by the U.S. Federal Reserve reversing its easing in 2015.

Huang Yiping, a deputy dean of National School of Development at Peking University, told the same event China should step back from using administrative measures to keep financial costs for small-and-medium enterprises at an ultra-low level. SMEs have seen their access to financial resources greatly improved as the government has been pushing an inclusive finance campaign, said Huang, a former member of monetary policy committee under the PBOC.

However, the government should consider letting the market determine risk pricing for inclusive financing especially that in its14th Five-Year Plan which will be unveiled later this year, Huang added.