BEIJING -- The Chinese stock market bubble grew
continuously through mid-June before undergoing corrections three times,
the country's central bank governor explained at a recent Group of 20
meeting in Turkey, signaling that its economy is already returning to
normal.
Finance ministers and central bank governors from
the G-20 nations gathered in Ankara for a two-day meeting that wrapped
up Saturday. The People's Bank of China released the comments of its
governor, Zhou Xiaochuan, at the conclusion of the meeting.
China's economic policies and responses to the
market turmoil have faced international criticism. While acknowledging
the bubble in Chinese equities, Zhou said that there has been no notable
impact on the real economy, crediting appropriate government action. He
emphasized that a string of policies, including the central bank
providing liquidity, has helped to curtail systemic risk.
The Shanghai stock market soared 150% in the year
leading up to June 12. Zhou pointed out that the balance of leveraged
positions accelerated during that time, resulting in heightened
undetected risk. Of the three ensuing corrections, he noted that the
third in late August had a global impact.
Zhou also discussed last month's yuan devaluation,
saying that it was an important step in moving the currency toward a
market-based rate. As the dollar strengthened amid expectations of a
U.S. interest rate hike, Zhou said that the yuan's effective rate had
become too strong. Yet with no change in China's economic fundamentals,
he stressed that there is no foundation for continuing to devalue the
yuan over the long term.
Source : Asia Nikkei
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