Despite the fact that China’s quarter GDP has beaten analyst forecasts at 6.9%, mainland stock markets have closed down lower Monday depicting weaker confidence.
Stocks plummeted across China on Monday, with 500 stocks hitting their 10% daily limit and 1,200 falling 7%, according to the South China Morning Post. Analysts are blaming the panic on messages out of a central government conference on finance and economic affairs held over the weekend.
The two-day closed-door meeting, dubbed the National Financial Work Conference, has been convened every five years since 1997 and is widely considered to set the tone for financial reforms.
This session is said to offer policy guidance that may be endorsed at the 19th Communist Party Congress later this year.
The Conference is convened at a time when the CPC central committee is facing great challenges both at home and overseas.
The most wanted exiled tycoon Guo Wengui has once again warned in his latest whistle blow July 17th that China will “inevitably see a severe financial crisis in the coming years” as the country “has been kidnapped by high-level corrupt officials in the central government amid brutal political struggles”.
Traditionally, the Conference was presided over by the premier. This time, it was chaired by President Xi who sat at the centre of the podium and gave the central speech, an indication that the President has consolidated control of finance and economic matters in his own hand. By his side is Premier Li Keqiang, who is deputy head of the group, and Vice Premier Zhang Gaoli, a member of the group.
“To keep up with the pace of financial opening up, China must have a strong regulatory capability”, said President Xi.
It was announced after the conference that a committee will be set up under the State Council to oversee financial stability and development.
Following this, China’s top banking regulator said Monday it will place more priority on proactively preventing and defusing financial risks. The China Banking Regulatory Commission (CBRC) said in a statement it will focus on guarding against risks in liquidity, credit, shadow banking and other major areas.
The commission will make planned and step-by-step efforts to tighten the regulation of interbank investment and financing, leveraging and off-balance-sheet business, according to the statement.Reforms of the banking sector will be accelerated to improve lenders’ corporate governance and introduce private capital into the industry in an orderly way, the statement said.
“China should improve its investment and market environment, accelerate opening up to the outside world and lower operating costs,” Xi Jinping said Monday, adding the country should “create a stable, fair, transparent and predictable business environment, and speed up efforts to build an open economy in a bid to promote the sustainable and healthy development of the Chinese economy.”
The typical forecast was for a slight slowdown in the second half of 2017.
“Overall, the economy continued to show steady progress in the first half … but international instability and uncertainties are still relatively large, and the domestic long-term buildup of structural imbalances remain,” China’s National Bureau of Statistics said in a statement which accompanied the data.
According to Reuters, China’s economy expanded faster-than-expected in the second quarter, setting the country on course to comfortably meet its 2017 growth target and giving policymakers room to tackle big economic challenges ahead of key leadership changes later this year.
By Cloudy Seagail