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Beijing sends strongest signal so far to restore market confidence
Financial stability & development part of implementing "two establishments" & "two upholds"
In the clearest signal from Beijing to restore market confidence so far, a special meeting of the Financial Stability and Development Committee of the State Council was held on Wednesday, March 16, chaired by Politburo Member and Vice Premier Liu He.
The readout from the meeting has now - almost instantly - turned the Chinese mainland stock markets into positive ground, in stark contrast with the pessimism that has clouded the Chinese market in recent days.
Below is Pekingnology’s translation and brief explanations of the readout, which is also pasted at the end.
BEIJING, March 16 (Xinhua) -- On March 16, the Financial Stability and Development Committee of the State Council held a special meeting to study the current economic situation and capital market issues. The meeting was chaired by Liu He, a member of the Political Bureau of the CPC Central Committee, Vice Premier of the State Council, and Director of the Financial Stability and Development Committee, and comrades in charge of relevant departments attended the meeting.
The meeting pointed out that in the current complex situation, the most critical thing is to adhere to the “development is the Communist Party of China's top priority in governance”, adhere to the "economic development as the central task", adhere to deepening reform and expanding opening-up, adhere to market-oriented, rule-of-law principles, adhere to the "two unwavering", effectively protect property rights, fully implement the spirit of the Central Economic Work Conference [Pekingnology] and the deployment of the "Two Sessions" [Pekingnology], coordinate epidemic/COVID-19 prevention & control and economic and social development, maintain the economic operation within a reasonable range, and maintain the smooth operation of the capital markets.
[Comment: Development is the Communist Party of China's top priority in governance and economic development as the central task are time-honored principles that stress the utmost importance of economic development for the CPC and the country.]
The meeting studied related issues. On the macroeconomic operation, we must implement the decision and deployment of the Party Central Committee, and effectively vitalize the economy in the first quarter. The monetary policy shall take the initiative in response, new loans shall maintain moderate growth. Regarding real estate enterprises, we must promptly study and propose a strong and effective response program to prevent and resolve risks, and propose complementary/supplementary measures that transform to a new development model.
Regarding Chinese companies listed in the United States, the Chinese and U.S. regulators have maintained good communication and have made positive progress, and are working to form specific cooperation programs.
[Comment: between China’s CSRC and the SEC.]
The Chinese government continues to support all types of enterprises to go public outside China.
Regarding the governance of the platform economy, relevant departments should improve the established programs in accordance with the guidelines of orientation towards the market, rule of law, and internationalization, adhere to the principle of seeking progress while maintaining stability, and through standardized, transparent, and predictable regulation, steadily promote and complete/finish as soon as possible the rectification of large platform companies, with "red" and "green" lights set, to promote the stable and healthy development of the platform economy and improve international competitiveness.
[Comment: The rectification of large platform companies, namely China’s Big Tech, will be completed/finished asap.]
On the issue of stability in Hong Kong's financial market, the regulators of the mainland and Hong Kong should strengthen communication and collaboration.
The meeting stressed that the relevant departments should effectively assume their responsibilities, actively introduce policies that are beneficial to the market, and be cautious in introducing contractionary policies. Hot issues of market concern should be responded to in a timely manner. Any policy that has a significant impact on the capital market should be coordinated with the financial management departments in advance, to maintain the stability and consistency of policy expectations.
[Comment: Departments other than the financial management departments be aware.]
The Financial Stability and Development Committee of the State Council will, according to the requirements of the Party Central Committee and the State Council, increase coordination and communication, and ensure accountability is held when necessary.
[Comment: The departments who failed in implementing this will be held responsible and suffer consequences.]
Financial institutions must look at the big picture and firmly support the development of the real economy. Long-term institutional investors are welcome to increase their shareholdings. All parties/departments/involved must have a deep understanding of the significance of the "two establishments", resolutely achieve the "two upholds", maintain the long-term trend of China's healthy economic development, and jointly maintain the stable development of the capital market.
The CPC Central Committee’s Resolution on the Major Achievements and Historical Experience over the Past Century approved at the 6th plenary session of the 19th Central Committee made it clear that “To establish the core leadership of comrade Xi Jinping in the CPC Central Committee and the whole Party, and establish the guiding role of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era reflects the common wish of all Chinese people—the CPC members, the People’s Liberation Army and all ethnic groups, and are of decisive significance to the development of the CPC and China in this new era, and to the historic process of the great rejuvenation of the Chinese nation.
The Two Upholds refer to upholding General Secretary Xi Jinping’s core position on the CPC Central Committee and in the Party as a whole, and upholding the Central Committee’s authority and its centralized, unified leadership.]
The readout in Chinese