The headquarters of the People's Bank of China in Beijing Photo: IC

Speaking at the China Development Forum hosted by a State Council’s think tank, the Development Research Center, Han Wenxiu, executive deputy director of the Central Financial and Economic Affairs Commission’s general office, attributed China’s safe haven role to the country’s prudent monetary policy over many years.

“China has adhered to the independence and normalization of its monetary policy. In the process of supporting economic development, the financial system has been stabilized, a large number of hidden risks have been eliminated, and the systemic risks have not occurred,” Han noted.

There is currently no obvious inflationary or deflationary pressure in the country, and monetary policy has a large room for maneuvering, he added.

Han’s remarks came amid an unfolding banking system crisis in the US and Europe, which has hurt international investors’ confidence.

The collapse of Silicon Valley Bank and Signature Bank, two mid-sized banks in the US, in early March followed by embattled Switzerland’s Credit Suisse, which was later acquired by the country’s largest bank UBS for 3 billion Swiss francs ($3.2 billion) have added to concerns of international investors over fears of a global financial crisis in the making.

Changes in interest rates led to a sharp depreciation of various financial assets, which in turn triggered a comprehensive balance sheet recession, resulting in a dilemma for the US and the world, such as the collapse of Silicon Valley Bank and the “domino” effect in the global financial market, Li Yang, an academic member of Chinese Academy of Social Sciences and chairman of National Institution for Finance and Development, told a panel at the forum.

A recent Bloomberg report said as “some of the ultra-high-net-worth individuals and their family offices will look beyond the default option of using its rescuer UBS Group AG for all their wealth management needs… Asia is an obvious destination,” specifically pointing to Singapore and China’s Hong Kong Special Administrative Region.

More than 100 decision-makers from global family offices and their professional teams gathered at a wealth summit in Hong Kong on Friday. The popularity of the event underscored the SAR’s appeal as a world-leading international asset and wealth management hub.

“It is clear that risks to financial stability have mounted. At a time of higher debt levels, the rapid transition from a prolonged period of low interest rates to much higher rates — necessary to fight inflation — inevitably generates stresses and vulnerabilities, as evidenced by recent developments in the banking sector in some advanced economies,” Kristalina Georgieva, managing director of International Monetary Fund (IMF), said on Sunday during a panel at the forum, according to a statement that the IMF sent to the Global Times.

Georgieva called for further vigilance despite recent actions by advanced economy central banks have eased market stress to some extent.

Global Times