采访/易如 编辑/李谦 后制/黎安安
Central Bank Injects Cash to Ease “Money Shortage”
Facing a heat-up of the “money shortage”,
China’s central bank at first refused cash injection.
However, the stock market’s fall and
economic panic ensued.
On June 25, the central bank announced that liquidity
support had begun, towards some financial institutions.
Why has the central bank changed its attitude?
Let’s see what the experts say.
On its official website, the People’s Bank of China has said
that liquidity has been offered to some financial institutions.
This is allegedly done to stabilize money-market rates.
China’s “money shortage” has pushed up
interbank call-loan rate, up to 13% at the peak.
On June 24, citizens were even unable to withdraw money
from agencies of the Industrial & Commercial Bank of China.
Prior to this development, China’s central bank had refused
to inject cash into the financial system.
Xie Tian, professor at Aiken Business School,
University of South Carolina, offers his analysis.
Xie says premier Li Keqiang and other officials in charge
of economy , may want to discontinue the previous policy.
That is, to stop the focus on infrastructure building.
Li Keqiang and his team may be trying to exercise
a macro-control to cool things down.
Xie Tian speculates that this is why the central bank
failed to inject money earlier on.
Xie Tian: “But now it seems that the money shortage
has caused too negative an effect, on China’s economy,
society, and investor confidence.
It has also aroused the world’s suspicions
over China’s economy.
So, because of this, the central bank
has to inject some funds.”
Xie Tian warns that if the Chinese Communist Party
authorities inject money by printing more paper money,
that will surely fuel inflation and burst the real estate bubble.
This will compound China’s economic problem.
However, if the central bank doesn’t offer cash aid,
it will cause economic panic, Xie Tian remarks.
So far, China’s leaders have been caught in a dilemma,
according to Xie Tian. He points out the core of the problem.
This is the issue of profit sharing between CCP
privileged groups , and ordinary Chinese citizens.
(Senior economist, USA) Jian Tianlun:
“The CCP has launched an anti-corruption drive.
This has caused many senior officials to
transfer their assets abroad.
So some banks in fact haven’t so much money
as the figures shown on their books would suggest.”
China’s banks have always been known as
“money bags” for CCP authorities.
The CCP faction under Jiang Zemin has
long controlled China’s financing sector.
Jiang’s faction members have used all means
to empty banks and pocket the assets.
Whilst the CCP authorities have filled the hole that is left
by printing more money.
After the 18th Party Congress, the CCP’s new
leadership proclaimed it would combat corruption,
especially in the financial sector.
Yet CCP officials have rushed to transfer
their money abroad, so as to resist the anti-graft drive.
Mao Shoulong, professor at Renmin University of China,
tells NTD about more information.
The current money shortage has multiple causes, he says.
These include a financial bubble,
loans being turned into local fiscal debts,
another cause is short-term deposits being used
The interest groups have used these as pretexts
to press the central bank to input liquidity.
Mao Shoulong: “They’ve used these reasons to bargain.
So central authorities have gambled on
the injection of money.
But the banks are required to digest currency inventory
and the increment.
The central bank tries to make efficient use of banks’
currency inventory, and to control the injected liquidity.”
Under the “money shortage”, Shanghai and Shenzhen
stock markets fell on June 24.
On June 25, the stock market opened with a drop, and
later saw a V-shaped rebound with a cash injection.
Feng Xingyuan, deputy director of Beijing-based
Unirule Institute of Economics, comments.
The central bank’s cash injection has eased
the money shortage, he says.
Yet, a small financial crisis did happen in China.
Feng Xingyuan: “In this case, if we still carry out
large-scale urbanization to boost fiscal expenditure,
it won’t work anymore.
The situation today is different from what it was in 2008.”
In 2008 the CCP authorities launched a 4-Trillion-yuan
stimulus plan to conquer a global financial crisis.
The scheme finally caused overlapping investment,
a real estate bubble and a sharp rise in prices.
Until today, these disastrous effects still exist
and they are becoming worse.