China's central bank chief urges more consumption, flows to emerging markets
HONG KONG (MarketWatch) - China's central bank governor said Friday that more domestic consumption is needed in light of the nation's high savings rate, and that some of the excess savings should be channeled to emerging markets, according to reports.
Speaking in Beijing at the Global Think Tank Summit, People's Bank of China Gov. Zhou Xiaochuan said Chinese fund flows to emerging markets would help correct global imbalances.
"Given the high savings rate in China, we may still maintain residual savings. If there are any, I would like them to flow to other developing countries," Zhou was quoted as saying by Dow Jones Newswires.
"This will need the support of the international financial system, including the international monetary system, to help improve global productivity and income distribution, and drive broader global growth," he said.
The speech followed comments by PBOC officials last week which leveled criticism at the domination of the global monetary system by one currency -- an apparent reference to the U.S. dollar -- and called for the establishment of a new global reserve currency. See full story on Chinese criticism of dollar.
On Thursday, China also announced new regulations that enable selected Chinese companies trading with Hong Kong and Macau to settle those trades in yuan, a move seen as preparing the currency for a greater role in international commerce. See full story on yuan settlements.
"To many minds here in China, the U.S. dollar's time is almost up, the euro zone suffers from political paralysis and a too-conservative central bank, while two decades of economic stagnation and a shrinking population do the yen no favors. For them, the Chinese yuan is an obvious, and imminent, replacement," said Standard Chartered's Shanghai-based research head Stephen Green said in a note Thursday
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