China central bank chief weighs in on US trade frictions

BEIJING • China's "huge" trade imbalance with the United States is a structural and long-term problem that should be viewed with rationality, said Chinese central bank governor Yi Gang.

Mr Yi, who was appointed to head the People's Bank of China in March, also called for concerted efforts from the US and China to resolve the trade dispute, the financial magazine Caixin said in a report published last Friday.

His remarks came after an inconclusive two-day meeting between top Chinese and US officials in Beijing amid escalating tit-for-tat tariff threats between the world's two biggest economies.

Washinton wants Beijing to cut its trade surplus with the US by at least US$200 billion (S$265 billion) by end-2020, sources said. China posted a record US goods trade surplus of US$375 billion last year.

China's opening up will not be affected by the current trade frictions with the US, Mr Yi said.

He weighed in briefly on the US-China trade issue in a wide-ranging interview with Caixin in Washington last month. The central bank governor reiterated China's existing stance on several issues, including monetary policy, the opening up of its economy, the yuan and the country's deleveraging efforts.

Mr Yi reiterated China's commitment to a prudent and neutral monetary policy, its focus on stabilising its macro leverage ratio, and reducing financial risks.

On the currency front, he said the Chinese central bank has not intervened in the foreign exchange market for almost a year now, and that the authorities are committed to market-based foreign exchange rate reform.

China will also push for the convertibility of the capital account to coincide with the opening up of the financial sector, Mr Yi said.

Beijing, in recent weeks, has said it will resume two key outbound investment schemes, allowing domestic financial institutions to invest in overseas securities.

However, in the process of opening up, China will step up oversight of cross-border capital flows, prevent the contagion of cross-border financial risks, and fend off international arbitrage, Mr Yi said.

In its deleveraging campaign, China will take aim at debt levels of local governments and state-owned firms, he added.

REUTERS

A version of this article appeared in the print edition of The Straits Times on May 08, 2018, with the headline 'China central bank chief weighs in on US trade frictions'. Print Edition | Subscribe