EXCLUSIVE China securities regulator met foreign banks to soothe economic concerns

HONG KONG, Jan 28 (Reuters) – The China Securities and Regulatory Commission (CSRC) met this week with executives at top western banks and asset managers to reassure them about the country’s economic prospects after regulatory crackdowns in 2021, three sources said on Friday.

CSRC Vice Chairman Fang Xinghai hosted the virtual meeting with more than a dozen foreign financial institutions on Tuesday, said the sources, who had direct knowledge of the meeting, declining to be identified as they were not authorized to speak to the media.

Senior executives from firms including BlackRock (BLK.N), Credit Suisse (CSGN.S), Fidelity International, Goldman Sachs (GS.N), JPMorgan (JPM.N), Morgan Stanley (MS.N) and UBS (UBSG.S) attended the meeting, said two of the sources.

Fang reassured the meeting participants that China will achieve “respectable growth” in 2022, one of the sources said.

Fang also said that China’s leadership understood that the regulatory changes Beijing introduced in 2021 would affect economic growth but was determined to tolerate the pains. However, 2022 will be different year as it will have a series of significant events, including the key once-in-five-years Communist Party congress later this year, according to the source.

The CSRC did not immediately respond to a request for comment.

Fidelity and UBS declined to comment, while the other companies did not immediately respond to a request for comment.

The Chinese regulator called the meeting against the backdrop of a relative slowdown in growth in the world’s second-largest economy amid its struggles with sporadic small-scale COVID-19 outbreaks and the darkening outlook for its heavily indebted property sector.

The economy grew by 4% in the fourth quarter from a year earlier, its weakest expansion in 1-1/2 years. China’s central bank has already started cutting interest rates and pumping more cash into the financial system to prop up the slowing economy. read more

The CSRC was also keen to understand whether asset allocation to China by foreign financial institutions will change because of the prospect of rising U.S. interest rates.

Federal Reserve chair Jerome Powell unleashed bets on five or more hikes this year after he left the door open on Wednesday to raising rates faster than in previous cycles. read more

Fang also told the executives that China and the United States were making progress in coordinating regulations governing Chinese companies listed in New York and there could be a “positive surprise” by June or earlier.

The U.S. Securities and Exchange Commission said last month that Chinese companies that list on U.S. stock exchanges must disclose whether they are owned or controlled by a government entity and provide evidence of their auditing inspections.

The rule advances a process that could lead to more than 200 companies being kicked off U.S. exchanges and could make some Chinese companies less attractive to investors.

Reporting by Xie Yu and Selena Li in Hong Kong; and Samuel Shen in Shanghai; Editing by Sumeet Chatterjee and Christian Schmollinger

Source: https://www.reuters.com/world/china/exclusive-china-regulator-talks-foreign-banks-soothe-concerns-over-economy-2022-01-28/