Zhou Xiaochuan, Governor of the People's Bank of China, during a group photo at the 2017 IMF Spring Meetings in Washington, US on April 22, 2017. Samuel Corum/ Anadolu Agency
Zhou Xiaochuan, Governor of the People's Bank of China. Photo: AFP/Samuel Corum/Anadolu Agency

One of the reasons cited for Hong Kong stocks’ biggest drop this year on Thursday was comments made by People’s Bank of China Governor Zhou Xiaochuan.

Speaking on the sidelines of China’s Party Congress, Zhou signaled to markets that the government’s campaign to reign in financial risks would go on, reiterating criticisms of excess Chinese corporate leverage.

Zhou also warned of the risks posed by asset bubbles and rising household debt, comments that were blown completely out of proportion by financial news outlets.

“If there are too many pro-cyclical factors in the economy, cyclical fluctuations are magnified and there is excessive optimism during the period, accumulating contradictions that could lead to the so-called Minsky Moment,” Zhou said, referring to the potential for a sudden collapse of asset prices after a long period of growth.

CNBC cobbled together a video using reporting from Reuters, set to a somewhat ominous driving baseline, which began with the words “China’s economy may be in trouble.” The content of the video went on to imply that Zhou Xiaochuan said just that, in stark contrast to the confidence other Chinese leaders are espousing.

In fact, Zhou’s words align with the central leadership’s consistent calls for efforts to reign in financial risks and continue to push for deleveraging. And the rising household debt? It still pales in comparison to what is seen in other countries, Zhou merely said that China should watch this to avoid running into a problem that China still has no need to worry about.