China says must balance stabilizing growth and financial risk prevention

Credit: REUTERS/ALY SONG

China must balance the relationship between stabilizing growth and financial risk prevention, the State Council's financial stability committee concluded in a meeting chaired by Vice Premier Liu He on Thursday.

Adds details, background

BEIJING, Nov 28 (Reuters) - China must balance the relationship between stabilizing growth and financial risk prevention, the State Council's financial stability committee concluded in a meeting chaired by Vice Premier Liu He on Thursday.

The government will increase "counter-cyclical" adjustments - suggesting more economic support measures to come - while resolving financial risks through more reforms, according to a statement summarizing the meeting posted on the Chinese government website.

"In the next stage (of financial risk prevention), it is necessary to be problem-oriented, further deepening the reform of capital markets and small and medium banks, and guide the healthy development of the private equity industry," the statement said.

It added China would strengthen capital capabilities for commercial banks, especially small to medium-sized lenders.

Earlier this year, a rare government seizure of then little-known Baoshang Bank and a state-rescue of Jinzhou Bank and Hengfeng Bank revived concerns about the true health of hundreds of small lenders in the country as China's economic growth slowed to nearly a 30-year low.

In November, the government of a Chinese city sought to assure depositors of a local bank's financial health in the wake of the country's second bank run in two weeks, triggered by fears over ill management and liquidity issues at smaller lenders.

"(We must) maintain the stable operation of the financial system, and maintain the stability of the overall economic and social environment," the statement said.

(Reporting by Beijing Monitoring Desk; Writing by Yawen Chen; Editing by Alex Richardson)

((yawen.chen@thomsonreuters.com; +86 10 5669 2126; Follow me on Twitter https://twitter.com/ywchen1;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More