Zero Hedge — Ex-PBOC Head Warns China's Exporters Could Soon Ditch The US

Former Chinese central bank governor Zhou Xiaochuan suggested on Wednesday that the direct impact on China of the trade war with the US "appears limited," though it could quickly prompt China’s top exporters to pivot away from US markets. Xiaochuan, who left the bank in March after 15 years at the helm, told Reuters that China's economy would be stable in 2018, with an expected growth rate of 6.5%….

Reuters said Xiaochuan downplayed the idea that protectionism will severely affect economic growth in China, which he said had been estimated at 0.2-0.8% of GDP…. 

As a result of the peak in "hyper-globalization", China is being forced to change its growth strategy after many decades. The economic driver of supplying Western markets with cheap goods and constructing ghost cities in China are over. “Whether this is reaching the peak or has peaked and maybe going down, we need to find some new economic growth driver," said Xiaochuan....

Zero Hedge
Ex-PBOC Head Warns China's Exporters Could Soon Ditch The US

Tyler Durden

BIS — Speeches by Zhou Xiaochuan, Jerome H Powell and William C Dudley

Bank for International Settlements
Zhou Xiaochuan: Prospects of the Chinese economy - broad-based growth
Speech and Q&A by Mr Zhou Xiaochuan, Governor of the People's Bank of China, at the 32rd G30 Annual International Banking Seminar, Washington DC, 15 October 2017.

Jerome H Powell: Introductory remarks
Speech by Mr Jerome H Powell, Member of the Board of Governors of the Federal Reserve System, at the Roundtable of the Alternative Reference Rates Committee, The Federal Reserve Bank of New York, New York City, 2 November 2017.

William C Dudley: Lessons from the financial crisis
Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Economic Club of New York, New York City, 6 November 2017.

Zhou Xiaochuan — The opening-up of Chinese economy - from manufacturing industry to service industry

Keynote speech by Mr Zhou Xiaochuan, Governor of the People's Bank of China, at the 2017 Lujiazui Forum "Financial reform and steady development from a global perspective", Shanghai, 21 June 2017.

Bank of International Settlements
Zhou Xiaochuan: The opening-up of Chinese economy - from manufacturing industry to service industry
Keynote speech by Mr Zhou Xiaochuan, Governor of the People's Bank of China, at the 2017 Lujiazui Forum "Financial reform and steady development from a global perspective", Shanghai, 21 June 2017.

David Nicklaus — China's worry about 'Minsky moment' may be a good sign

Randy Wray gets a mention.

St. Louts Post-Dispatch
Nicklaus: China's worry about 'Minsky moment' may be a good sign

David Nicklaus, business columnist for the St. Louis Post-Dispatch.

Reuters — China's central bank Anticipates a "Minsky moment."

Hyman Minsky goes to China.

China will fend off risks from excessive optimism that could lead to a "Minsky Moment", central bank governor Zhou Xiaochuan said on Thursday, adding that corporate debt levels are relatively high and household debt is rising too quickly.

A Minsky Moment is a sudden collapse of asset prices after a long period of growth, sparked by debt or currency pressures. The theory is named after economist Hyman Minsky....

"If there are too many pro-cyclical factors in the economy, cyclical fluctuations are magnified and there is excessive optimism during the period, accumulating contradictions that could lead to the so-called Minsky Moment," Zhou was speaking on the sidelines of China's 19th Communist Party congress.

"We should focus on preventing a dramatic adjustment," he said. China will control risks from sudden adjustments to asset bubbles and will seriously deal with disguised debt of local government financing vehicles, Zhou said....

CNBC

China's central bank just warned of a sudden collapse in asset prices

Reuters

Asia Times — PBOC’s Zhou says China will maintain proactive fiscal policy

Zhou Xiaochuan, President of the People’s Bank of China, said that the nation will continue to implement a proactive fiscal policy and a prudent monetary policy, and continue to fight shadow banking, the real estate bubble and other risks, China Securities Journal reported.
“China’s price level has remained stable, the foreign exchange market has ran smoothly and cross-border capital flows were balanced,” Zhou said. “China will further expand the financial industry, actively use new financial technology and tackle possible challenges.”

Asia Times

PBOC’s Zhou says China will maintain proactive fiscal policy

Staff

Andrew Batson — SDR inclusion as commitment device

Perhaps another way of putting this is that SDR inclusion is a commitment device. In addition to the practical concerns raised by Zhou, there would also be reputational costs to reversing exchange-rate and capital-account reforms. Since SDR inclusion is contingent on the IMF’s determination that the renminbi is “freely usable,” it could conceivably be reversed if the currency were to stop being freely usable. What future Chinese central bank governor will want to see headlines screaming “IMF expels renminbi from SDR”?

Of course, China over the past year has in fact been de-facto tightening capital controls by stepping up scrutiny of overseas M&A and slowing down approval of foreign-exchange transactions. But it has done so largely by using its regulatory discretion rather than changing formal rules. So perhaps the commitment device is working some....

Andrew Batson's Blog 

SDR inclusion as commitment device
Andrew Batson

Xinhua — China clarifies economic policies, reform agenda at G20 meeting

"No problem."

China.org.cn
China clarifies economic policies, reform agenda at G20 meeting

Xinhua

OAN — China Central Bank Head Says China Has More Room To Support Economy

China still has more room and tools in its monetary policy to tackle downward pressure in the economy, and its fiscal policy will be more proactive, central bank governor Zhou Xiaochuan said on Friday.…

Seems clear that the PBOC will support fiscal policy rather than counter it to manage inflation, as Western central banks do.

OAN
China Central Bank Head Says China Has More Room To Support Economy

Reporting by Samuel Shen and Jason Subler; Editing by Shri Navaratnam

See also:

Zhou said in Caixin the interview that there’s no basis for continued yuan depreciation, that the nation’s balance of payments is good, capital outflows are normal and the exchange rate is basically stable against a basket of currencies. China has no incentive to depreciate the currency to boost net exports, and there’s no direct link between the nation’s gross domestic product and its exchange rate, he said.

Bloomberg,  PBOC's Zhou Says China Still Has Monetary Space to Aid Economy

Caixin Online Transcript — PBOC Governor Zhou Xiaochuan Interview

Today we have some excerpts from the man who manages one of the world's most important currencies, Zhou Xiaochuan, governor of the People's Bank of China.

Caixin Online
Transcript: Zhou Xiaochuan Interview

James Mayger — China’s Zhou Kept Repeating the Bubble ‘Burst’ at G-20 Meeting

Get to know this guy. While he doesn't exactly run China's economy, he has the ear of the people that do. He apparently persuaded the leadership to further liberalize the currency and is certainly a top influencer. He is approaching retirement so this is his last stand.

Bloomberg
China’s Zhou Kept Repeating the Bubble ‘Burst’ at G-20 Meeting
James Mayger

Steve Keen — The International Financial Order

I was invited to give a speech on that topic to the Sec­ond Meet­ing of Min­is­ters of Finance of the CELAC in Quito, Ecuador today (Novem­ber 29 2013). In it I out­lined Keynes’s Ban­cor pro­posal from Bret­ton Woods, explained why White’s plan was adopted instead, sup­ported the pro­posal by Zhou Xiaochuan, the Gov­er­nor of the Cen­tral Bank of China, to insti­tute Keynes’s scheme, and pro­posed that Latin Amer­ica could try a regional ver­sion of the same via the Bank of the South.

Debtwatch
The International Financial Order
Steve Keen