China central bank opposes ‘currency manipulator’ label

BEIJING: China’s banking system saw improved concentration with the asset proportion of five large state-owned banks in a reasonable range, the country’s banking and insurance regulator said Monday.

The total asset of the five state-owned banks stood at 105 trillion yuan (about 15.17 trillion U.S. dollars), accounting for 37 percent of all banking financial institutions, the China Banking and Insurance Regulatory Commission (CBIRC) said on its website.

The five state-owned comprehensive commercial banks include the Bank of China, Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank and Bank of Communications.

By the end of 2018, China had 4,588 banking financial institutions covering over 20 types of banks, CBIRC data showed.

Of the sector’s total, the balance of deposits and loans of the five state-owned banks made up 44 percent and 38 percent, respectively.

Compared with the United States and major economies in Europe, China’s domestic banking system posted a lower concentration, the CBIRC said.

With mixed-ownership reform promoted in recent years, the number of financial institutions controlled by private capital has exceeded 3,000. Private capital accounts for 40 percent, 50 percent and 80 percent in the capital stock of joint-equity banks, city commercial banks and rural cooperative banks, respectively.

China would continue to accelerate financial supply-side structural reform and optimize the banking service system, said the CBIRC.

China’s central bank said Tuesday it is “resolutely opposed” to the United States labeling Beijing a currency manipulator a day after it let the yuan weaken significantly against the dollar.

China’s central bank steadied the yuan on Tuesday, but stock markets continued to fall.

The US Treasury Department on Monday “determined that China is a currency manipulator”, the second major escalation in the two countries’ spiralling trade war in just 24 hours.

The People’s Bank of China (PBOC) called the designation “wayward unilateralism and protectionist” and said it “seriously undermined international rules”.

The yuan exchange rate “is driven and determined by market forces,” the central bank said in a statement, adding it is “resolutely opposed to this”.

Both the onshore and offshore yuan breached the 7.0 level against the dollar on Monday, which investors see as a key threshold in the Chinese currency’s value, and global equity markets tumbled amid fears of the escalating trade war between the two biggest economies.

But forex trading on Tuesday was calmer, with the onshore yuan weakening 0.08 percent to 7.0512, and the offshore currency strengthening 0.24 percent to 7.0802.

China’s central bank weakened its central parity bank rate on Tuesday to the lowest level in more than 11 years, but by less than many analysts were expecting — suggesting the bank does not want to let the currency move too much.

“A more market-friendly China fix provided the first signal that the PBOC is having a second thought about weaponising the yuan,” said Stephen Innes, managing partner at VM Markets Pte Ltd Singapore.