As China Delivers Soothing Words To Its Banks, American Yuan Rhetoric Returns With A Vengeance

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Two key Chinese market concerns have been delivered some moderate relief, as the Chinese central bank has indicated that it will continue its ‘moderately easy monetary policy‘, and a Chinese bank regulator assured the financial sector that capital requirements won’t be increased as many had speculated.


China’s banking regulator hasn’t set additional capital requirements for domestic banks, but lenders need to improve risk management and avoid an excessive expansion in their business, Jiang Dingzhi, a vice chairman of the China Banking Regulatory Commission, said Friday.

Jiang’s comments come after the CBRC denied media reports Thursday it was considering raising the capital adequacy requirement for the country’s biggest lenders to as high as 15% from 11.5% now.

Thing is, talk is cheap and uncertainty remains. China’s CSI 300 index is only up moderately today, though escalating U.S. trade war rhetoric, which is likely a political gambit ahead of upcoming U.S. elections, could be adding a fresh concern for Chinese investors to fret over. So the minute one issue recedes, a new one emerges, and for the near-term at least, American politics are a far greater risk to China since it doesn’t take long to start a trade war, especially when politicians are desperate.


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