Capital flows in February were stable, the central bank vice-governor said on Thursday, as government advisers meeting at the Great Hall of the People in Beijing reiterated confidence in the yuan
“Overall, the situation is stable,” Yi Gang told the South China Morning Post when asked if capital outflows from the mainland and the fall in foreign exchange reserves had eased last month.
Yi’s message was echoed at the opening of the annual Chinese People’s Political Consultative Conference (CPPCC) – the Communist Party’s advisory body – after China made efforts to fend off concerns over the health of its economy at the G20 gathering of finance ministers and central bankers in Shanghai last month.
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While thousands of delegates are gathering in Beijing, angry underpaid coal mine workers are staging protests in the country’s rust-belt zones, new risks of property bubbles are growing in big cities, and hundreds of millions of stock investors are seeing fewer opportunities to make money from the markets.
China’s central bank republished an opinion piece on its website on Thursday arguing that the yuan was stable against a basket of currencies in February.
Also on Thursday, Finance Minister Lou Jiwei said in a statement posted on the ministry’s website that China had “plenty of policy tools and huge reform potential” to maintain strong growth.
Not everyone is convinced. Moody’s, the rating agency, has changed its China rating outlook to negative, a warning that it may downgrade China if economic woes continue.
“There are always voices on the international stage to ‘short’ China,” Mei Xingbao, a CPPCC member and the former head of one of China’s state-owned bad-asset management vehicles.
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“I don’t agree – despite the recent rise in non-performing loans ratio, it’s still below 2 per cent.”
Zhang Xiaoqiang, a CPPCC member and a former vice-chairman of China’s National Development and Reform Commission, said China’s foreign exchange reserves, despite record drops in December and January, were still “sufficient” by international standards as they covered half a year of imports.