Party journal says China can establish effective market stabilisation fund
China has the financial strength to set up a market stabilisation fund thanks to its strong economy and large foreign exchange reserves, a Communist Party journal said in an article highlighting the need to stabilise the market in uncertain economic times caused by Trump-induced trade turmoil.
'In a time of global economic instability with growing uncertainties, the establishment of a stabilisation fund can help maintain the stability of the capital market, protect the interests of small and medium-sized investors, and guard against systemic financial risks,' Study Times, the official publication of the Central Party School, the Party's top ideological training centre, said.
In the article, published on Wednesday, it added that China's increased regulatory capacity made it possible to ensure the effective performance of a stabilisation fund.
It said that establishing a stabilisation fund would help 'reduce irrationally high market volatility', adding that similar mechanisms had been widely tested by major economies in times of stock market panic, including the Hong Kong government's successful interventions to maintain market stability during the 1997 Asian financial crisis.
The aggressive trade tactics employed by America following US President Donald Trump's return to the White House in January – especially his 'Liberation Day' announcement of so-called reciprocal tariffs on America's trading partners on April 2 – have triggered tit-for-tat escalations, rattling global markets and threatening the viability of global supply chains.
Following face-to-face trade talks between Chinese and US officials in Switzerland over the weekend – the first such talks involving the new Trump administration – Beijing and Washington suspended most of the tariff increases introduced this year for 90 days from Wednesday. Negotiators are expected to conduct follow-up trade talks in the next few months.
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