Interesting comments from China’s Premier Wen Jiabao about Chinese government debt (according to Reuters dating to early January at the Government’s major financial conference) was only reported on the People’s Daily in late January.
The paper is a well known government mouthpiece and its reports often signify major turns in policy directions. In the speech Wen together assured the public about the safety and comfort of current government debts and pledged to contain government debts and to avoid spread of financial risks. This assurance is nothing new but the next part of his speech is more intriguing where he said there should be greater attention and controls placed on systemically important financial institutions. He even said China would “break monopolies” to encourage more private capital to flow into the financial sector.
Moreover Wen expressed an intention to explore a more multi-layer investment channel for China’s USD 3.18 trillion foreign reserves. This may foretell a switch its investment strategy, possibly away from traditional instruments such as US treasuries and Japanese bonds.
These promises sound fascinating; if realized, they could reshape the landscape of the present Chinese economy – one which some have criticized as heavily biased towards state owned enterprises. Though there is nothing likely to happen in the short term the picture Wen presents here is certainly a nice one to look at.
The Reuters article on this piece of news can be accessed here.