China’s central banker signaled a tighter hold on credit to avoid further fueling asset bubbles, though the bank stands ready to loosen its grip should the economy falter. Speaking at an annual news conference on Friday, central bank Gov. Zhou Xiaochuan suggested a slight shift away from the largely expansionary monetary policy the People’s Bank of China has followed the past few years to prop up growth. With the economy in a healthier state, he said, the bank is moving to support government efforts to rein in financial risks. “Too much credit in the economy,” Mr. Zhou said, “could trigger inflation and asset-price bubbles,” By comparison, “a more neutral monetary stance” can help prod companies to cut back on debts, he said.
To prevent the yuan from depreciating too fast, the central bank in the past year has burned through foreign-exchange reserves and tightened restrictions on money heading offshore. Late last year, authorities put in place rules restricting Chinese companies’ investment overseas. In 2016, China’s outbound direct investment jumped 44.1% from a year earlier to a record of $170.11 billion, leading to concerns that many of those deals were conducted for the sole purpose of moving money out. “There are questions about some companies’ enthusiasm in making acquisitions overseas and whether they are being cautious enough,” Mr. Zhou said.
Feel free to believe this fellow Zhou if you like. Ha! This is funny. This shows that life dealt our classmate a curveball, big time. Finally, if a couple of deals close, we’re thinking of renaming this place Plutocrat. Since we can’t deal with the current Civil War in the US, that would be pretty nice.