Beijing not too worried about economy

A top Chinese central banker says the mainland's economic fundamentals remain stable and vows its embattled property market will be careful managed to avoid a steep downturn.

"You may ask me, are you worried? No, not always, not too much," People's Bank of China deputy governor Zhang Qingsong said at the Global Financial Leaders' Investment Summit in Hong Kong yesterday.

"From the long-term perspective, the fundamentals of the Chinese economy remain stable and promising," Zhang added.

He said his evaluation is based on the longer-run framework and he prefers to let market forces play their roles as long as short-term economic indicators do not significantly deviate from the long-term goal.

It is a "natural selection and a market clearing process" to have a correction in the property market after two decades of rapid growth, Zhang said.

He added the old development model, which relied heavily on infrastructure investment and the real estate sector, is no longer sustainable.

Still, he was "quite confident" about the future of the property market given the room for urbanization and a strong potential demand for larger homes.

Authorities have also carried out three major initiatives - constructing supporting facilities in metropolises, speeding up renovations in big cities, and building more rental homes - to promote healthier development in the sector, Zhang said.

On local government debt, Zhang said most of the debts were issued by provinces with a strong debt servicing capacity, and tightening up accountability can push them to resolve their own issues.

There are some provinces facing pressure in servicing their debts, but the majority of these loans are backed by physical assets, he noted, adding the government has mapped out plans to handle the issue in a market-oriented, law-based manner.

China Securities Regulatory Commission vice chair Wang Jianjun meanwhile said the regulator will make it easier for Chinese firms to list in Hong Kong.

He said Hong Kong is a bedrock for Chinese stocks with 1,400 listed firms accounting for 80 percent of the bourse's trading volume.

In a prerecorded video, Vice Premier He Lifeng said the central government supports Hong Kong in its effort to maintain its international character as well as in expanding into Asean and Mideast markets.

Welcoming the summit's 300 delegates, Hong Kong Monetary Authority chief executive Eddie Yue Wai-man said the world has to live with new complexities and uncertainties including higher interest rates and its impact on the global economy.

"We have to learn how to make the best out of the challenges and also to grow our institution in spite of them," he said. "After all, financial institutions are here to manage complexity."

Chief Executive John Lee Ka-chiu said although Hong Kong as a free and open economy is not immune to headwinds, it remains among the most competitive economies in the world thanks to the one country, two systems formula of governance and its rule of law.

aiden.he@singtaonewscorp.com

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