China’s State Administration of Foreign Exchange (SAFE) has pledged to crack down on "hot money" inflows and step up monitoring of cross-border capital flows, Bloomberg reported. In a statement released after its annual work meeting, SAFE added that it would introduce exchange-rate mechanism reforms and improve foreign exchange reserve management. The People’s Bank of China, which also held its annual work meeting on Thursday, said it would manage liquidity in the banking system, ensure steady loan growth and enhance currency flexibility. It reiterated its plans to implement "prudent" monetary policy, using tools such as interest rates, reserve ratio requirements and open marketing operations. The commitments reflect China’s current preoccupation with inflation, which is at a two-year high, as a result of massive credit expansion in the last two years. There is also concern that the US Federal Reserve’s expanding monetary stimulus may cause capital inflow into China, further inflating asset prices.
You must log in to post a comment.
Yes, I would like to receive emails from China Economic Review. (You can unsubscribe anytime)
Copyright © 2018 SinoMedia Group Limited All rights reserved