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China’s central bank warns against U.S., Western ‘suppression’

By:
Reuters
Updated: Mar 15, 2023, 13:05 GMT+00:00

BEIJING (Reuters) - China will step up financing support for private micro and small enterprises, its central bank said on Wednesday, as the country aims to build on a recovery from COVID-19 disruptions while facing weaker demand abroad and a domestic property downturn.

Man wearing a mask walks past the headquarters of the People's Bank of China, the central bank, in Beijing

BEIJING (Reuters) -The People’s Bank of China (PBOC) said on Wednesday it will “appropriately” respond to U.S. and Western “containment and suppression”, in a rare warning by the central bank following calls by President Xi Jinping to safeguard national security.

It is unusual for the central bank to comment on foreign policy given its responsibility is finance, suggesting that China is signalling it is ready to deploy a wide range of countermeasures in response to increasing tension with the West.

The PBOC will “appropriately deal with the containment and suppression of the United States and the West”, the bank said in a statement published following an internal Communist Party committee study session.

Relations between the world’s two largest economies have been tense for years but worsened last month after the United States shot down a balloon off the U.S. east coast that it says was a Chinese spying craft.

While the U.S. has maintained it seeks to establish guardrails for the relationship, Xi has spoken of a need to “improve the national security system” and “build the people’s army into a great wall of steel that effectively safeguards national sovereignty, security and development interests”.

China’s President Xi said on Wednesday that “frontrunners” should sincerely support other countries in their development, Chinese state media Xinhua reported.

“One will not be seen in a more favourable light after blowing out others’ lamps, nor will they go further by blocking others’ paths,” Xinhua quoted Xi as saying.

Xi made the remarks in a keynote address delivered at a meeting with world political parties.

He added that, in pursuit of modernization, China will neither tread the old path of colonisation and plunder, nor the “crooked” path taken by some countries to seek hegemony once they grow strong, according to Xinhua.

“EXTERNAL SHOCKS AND RISKS”

China last week announced sweeping government reform, including the establishment of a new financial regulatory body that would take over some supervisory functions from the PBOC.

The setting up of a national financial regulatory administration comes as Beijing seeks to rein in large corporate and financial institutions to shore up its economy in the face of “external shocks and risks”, as the foreign exchange regulator characterised the challenges facing the economy on Wednesday in a separate statement.

The anticipated shocks and challenges from outside would likely complicate policy-making this year as China emerges from three years of austere COVID-19 policies that have weighed on its $18 trillion economy.

The PBOC reiterated that it would step up financing for private, micro and small enterprises and that it will support reasonable bond financing needs of private companies.

In recent years, the government has sought to tighten its grip on private businesses, by taking stakes in non-state enterprises or installing officials in large firms.

“We will precisely and effectively implement the prudent monetary policy, keep an appropriate pace of loan issuance, and keep the total supply of money and credit at an appropriate amount and grow steadily,” the bank said.

(Reporting by Beijing Newsroom; Editing by Jacqueline Wong, Jamie Freed and Emelia Sithole-Matarise)

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