China’s new director of the central bank, Yi Gang, made his first speech in a post on Sunday, pointing out that monetary policy will continue to remain stable and neutral, so as to create a suitable financial environment for supply-side reforms and high-quality economic development, Yicai.com reported.
Meanwhile, Yi also emphasized that the country is facing some potential financial risks, which are mainly reflected in the following:
First, there are still high leverage risks, especially in the state-owned enterprises area. Local government debt, as well as the rapidly growing leverage ratio among residents, are worth attention.
Second, though the trend of shadow banking has been curbed, there are some illegal financial activities operating without obtaining financial licences. These activities have been rapidly expanding in the name of innovation in the age of the Internet.
Third, a few financial holding groups have brought about contagion risks across the industry with problems such as capital absconding, circulating and false capital injections.
Look at politics first. The recent reforms during and after the national people’s congress shows that Xi and his CPC have realise again, East is East, West is west, if the two were mixed in one state, there would be reconcile conflicts. The June 4 turmoil was just a heavy lesson, and the collapse of USSR was even more dangerous lesson, to an east and communist country. China has to get rid of the western term of liberal, of democracy, of the separation of party and government. As we can see following the congress , party and state organs just merged together, some with one unit but two name plate, to mean party is govern both government and party organs. That’s the nature of the new China, and it has been working quite well as the world witnesses. Now Mr.Yi should learn something, the supply side economy has imbedded western ideologies, it did not work goodness even in Reagan’s America, with so called free market covering the big government . which borrowed huge debts more than amount of whole American history up to Reagan’s time.
Low inflation and higher employment during the supply side policy were only decorated by the future tax payers fortune. China needs another reform to clear all this faked terms in economy, until they establish real China school of economics, it would always in dangers of crises infested form the west sickness.