This is further evidence that China will not resort to a flood of stimulus to prop up its economy as it has done in the past, but a continuation of last year’s trickle of announcements designed to keep growth from stalling while promising greater support for the private sector, which has long had an unfair advantage against state -owned enterprises. China wants to lift lending to small companies from big banks by more than 30 per cent this year,
For Australian investors, the focus remains on the outcome of US-China trade talks which could drag on into April if negotiators cannot reach a firm deal that gives Xi Jinping enough confidence to meet Donald Trump in Florida. Beijing does not want a repeat of Trump’s fizzer of a meeting with North Korean leader Kim Jong-un in Hanoi last month.
Prominent Chinese economist Keyu Jin told The Australian Financial Review Business Summit last week that US trade tensions could be the “strategic gift” that proponents of China’s long-awaited financial sector reforms needed. Her argument is that external pressure will help Xi deliver on many of his long-awaited reforms despite resistance from inside the Communist Party, partly because of the vested interests tied up in bloated state-owned enterprises.
“What’s happening today in terms of external pressure coming from the US is actually helping China to push through some of its reforms,” she said.
While China has taken small steps in some areas, such as opening up part of its financial services sector to foreign investment, there is still a long way to go.
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