context: China’s stock and forex markets have been in constant decline since June. PBoC pumped 750 bn net liquidity with 1 percent reserve requirement lowering to prop up the stock market, which failed as indices continued to drop. A policy push to stimulate private and small enterprises hardly translated into real outcomes. PBoC governor Yi Gang and vice premier Liu He have also frequently delivered messages to stabilise expectations. It remains in question, however, whether florid political rhetoric can really rescue ice-cold market confidence.

Dropping stock market values and economic uncertainties are motivating major financial policymakers to try to calm down the market. Specifically

  • Yi Gang 易纲 People’s Bank of China governor was interviewed by the agency’s mouthpiece Financial News, maintaining that
    • the recent stock market drop is mostly affected by investors’ expectations and sentiments, in stark contrast with
      • China’s still-robust economic fundamentals
      • progress on financial risk prevention
      • stabilised macro leverage ratio
      • steady and strong growth
    • PBoC encourages local government support to help local firms maintain liquidity
    • PBoC will continue to
      • promote bond and equity financing programs for private enterprises
      • encourage credit releases to private enterprises with comprehensive use of monetary policies
  • Guo Shuqing 郭树清 China Banking and Insurance Regulatory Commission chairman spoke through China Securities Journal, a Xinhua-affiliated newspaper, saying
    • financial market volatility is in sharp contradiction with China’s economic development—the stable and improving trend of the economy remains unchanged and systemic crisis is completely controllable
    • CBIRC will implement ‘six stabilisation’ requirements to bring financial markets back on track
    • specific policies are underway to address equity-pledged loan default risks and encourage long-term financing for listed companies
  • Liu Shiyu 刘士余 China Securities Regulatory Commission chairman was interviewed by Xinhua, introducing upcoming moves to promote opening of capital markets, including