Beijing to tackle financial woes

China's main government organs have pledged to tackle overcapacity and reduce financing costs and the debt burden of companies as officials seek to underpin growth in the world's second-largest economy.

The authorities will use multiple liquidity management tools, improve macro-prudential management and keep appropriate liquidity levels and stable money market operations, according to a joint statement issued yesterday by agencies including the People's Bank of China, National Development and Reform Commission and the Ministry of Finance.

The nation's communist leaders are seeking to maintain economic growth of at least 6.5 per cent a year through 2020 to meet their pledge of creating a "moderately prosperous society".

The statement comes after Premier Li Keqiang took the nation's policymakers to task for the way they handled a rout in stocks and the yuan, making him the most senior official to date to fault the response to the turmoil.

Regulators did not respond actively to declines and some even have management problems, Mr Li said in a State Council meeting on Monday, according to a Beijing News report carried on the government's website.

Mr Li did not specify the regulators at fault and defended the decision to intervene in equity and foreign-exchange markets as necessary to head off systemic risks and "defuse some bombs".

The China Securities Regulatory Commission has drawn criticism recently over a series of steps such as a circuit-breaker system that had to be rescinded just four days after it was introduced in January.

Its stock markets crashed - after cheerleading by state media helped fuel an unprecedented boom in mainland shares last summer - as regulators failed to manage a surge in leveraged bets by individual investors.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on February 17, 2016, with the headline 'Beijing to tackle financial woes'. Print Edition | Subscribe