China Central Bank Governor: Regulators Should Also Use Fiscal Policy

This daily digest focuses on market sentiment, new developments in China’s foreign exchange policy, changes in financial market regulations and Chinese-language economic coverage in order to keep DailyFX readers up-to-date on news typically covered only in Chinese-language sources.

– Chinese top officials commented on the Chinese currency and government policies at the G-20 meetings.

– New bonds issued in January increased by 117.3% to 2.1 trillion yuan from a year ago.

-The growth in housing prices in the second-tier and third-tier cities remains slow.

Hexun News: Chinese leading online media of financial news

– China’s Premier Li Keqiang: Over-use of quantitative easing policy may bring negative effects. China needs to continue to promote financial reforms.

He also said Yuan has no basis for continued devaluation.

– China’s Central Bank Governor Zhou Xiaochuan: China opposes competitive devaluation and has no need to use it to stimulate exports.

He said that Yuan rates refer to a basket of currencies. In the basket, the US dollar has the largest weight. At the same time, Euro, Japanese Yen, British Pound and other currencies including some emerging countries’ currencies all have their weights in the basket.

He believes that monetary policy is an effective tool and has proven useful during the crisis. However, over the past 2-3 years, monetary policy has been used quite a bit; thus regulators should look to use other tools as well, such as the fiscal policy.

– China’s Finance Minister Lou Jiwei: high-debt ratio has become a global issue that many governments are facing.

He suggested that structural reform was the best way to sustain economic growth in G20 countries.

Xinhua News: Chinese government’s official news agency

– Xinhua News issued commentary saying that China does not need a new “Plaza Agreement”. It said that the Chinese Yuan will neither have a one-time large appreciation or devaluation in the short term; a relatively stable Yuan will help to support the Chinese economy.