China could be bolder in opening up the financial sector to foreign competitors and rely less on stimulus to boost the economy in the future, the head of China's central bank said on Friday.
“Now that we have entered a new stage, we can be bolder about increasing market access and a higher degree of opening to the outside world,” said Xiaochuan Zhou, China's longest-serving central bank governor.
He listed new policies that open up cross-border trading, such as "Shanghai-Hong Kong Stock Connect," "Shenzhen-Hong Kong Stock Connect," and the latest "Bond Connect," as evidence of progress that the People's Bank of China has accomplished to embrace a more open market. More new policies and reforms would follow, Zhou said at Friday's press conference.
However, analysts told South China Morning Post that it was still too early to tell if the market liberalization started by Zhou and other “reformers” would come as promised.
“Whereas Zhu Rongji [China's former premier] is considered a legendary economic reformer, and Zhou Xiaochuan is seen as a sophisticated and successful manager of China’s continued economic growth, Beijing seems to have now re-prioritized politics over economics,” said Brock Silvers, managing director of Kaiyuan Capital in Shanghai.
In addition to an economic opening-up, Zhou also highlighted that China does not need massive quantitative stimulus to boost the economy any more.
“We now emphasize the new normal of the economy, shifting from the past growth model of quantitative growth to high quality growth,” Zhou said, in what was likely his last news briefing before his expected retirement this month. “As we pursue quality growth, it is possible to reduce this type of growth model that used to rely heavily on financing support.”
Earlier this week, China's Premier Keqiang Li announced a growth target of around 6.5 percent for this year, the same level that China handily beat in 2017 thanks in part to massive government infrastructure spending and record bank lending.
China has rarely missed its official growth target, and analysts suspect it could quickly u-turn on policy and resort to stimulus again if there is a threat of a sharper slowdown.
(Reuters News contributed to this article.)