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| Fluctuating Stock Prices 'Not Macroeconomic Problem': Central Bank |
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The fluctuating prices on China's fledgling stock market recently are not a macroeconomic problem and should not lead to any major change of trends, said the country's central bank governor here on Monday. "I personally believe this is not a problem on the macroeconomic level and should not lead to any major change of trends," said Zhou Xiaochuan, governor of the People's Bank of China, at a press conference held on the sidelines of the annual full session of the Chinese parliament. Asked whether he agrees that the Shanghai stock market should be held responsible for triggering the drastic fall of the global market at the end of February, Zhou made no direct comment but acknowledged that globalization is making stock markets around the world more and more "interrelated". "China used to believe that its (stock) market is a comparatively small market, a market still under construction and in its early years, or a newly-established market gradually growing in a shifting economic system," said Zhou. "However, due to the development of economic globalization, there has been a close interrelation of fluctuations on different stock markets. This tells us that we need to speed up the development of the Chinese market," he added. The governor said that China should further increase the ratio of direct fund raising and step up efforts to make its capital market "better and more internationalized." The Shanghai Composite Index fell 8.8 percent to 2,771.79 on Feb. 27, the biggest single-day percentage fall in a decade, which some people said had affected markets in the rest of Asia, Europe and the United States. Market prices had kept fluctuating in the following trading days. Zhou also conceded that China is faced with the problem of excessive liquidity in its financial system, but stressed that excessive liquidity is a "global phenomenon." "The same problem is faced by the United States, which has a huge financial deficit, and those oil-producing countries with a rich capital reserve," said Zhou. "All macro-economic regulatory bodies should pay high attention to this problem and adopt prudent and adequately stringent policies regarding the excessive liquidity," he added. But the governor said he didn't believe excessive liquidity would have direct impact on a specific capital market, including the stock market and real estate market, on a specific date. "We shall see that the market is very complicated and there are a host of reasons for its fluctuation," he said. (Xinhua News Agency March 12, 2007) |
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