The RMB would be more widely-accepted to facilitate international trade and cross-border investments for Chinese companies and make China the pricing country for many global commodities. The Chinese can travel, study and make purchases abroad more easily. The SDR speeds up RMB internationalization that would deepen domestic financial reform on exchange rates and interest rates. Nevertheless, Beijing would stay active in currency policy to reduce global financial risk.
Free trade zones expanded
On March 1, the State Council granted Tianjin, Guangdong and Fujian to have pilot free trade zones, while the Shanghai free trade zone was expanded. On April 21, the pilot free trade zones were listed in China's 2.0 era.
The free trade zones boost reform, opening up and innovative development. Such zones streamline bureaucracy and encourage institutional innovation. In the Shanghai free trade area,"single window" services help enterprises with registration and to record import-export business registration.
In the six months after its expansion, more than 9,000 enterprises signed on, which account for the 20-year's total since its founding. The assets of enterprises from the free trade zone have witnessed rapid growth, especially among newly-increased assets of the Shanghai banking industry in 2015.
Pushing financial anti-corruption efforts
This year marks a dramatic year in China securities history. From a bull market and then to a sudden slump, Chinese investors had experienced an unprecedented stock market disaster.
The irrational slump struck investors' confidence in the Chinese economy and its securities markets. On Oct. 30, Beijing had launched a financial anti-corruption crack down. The next day, the No.13 Central anti-corruption inspection team had placed CITIC Group under investigation.
On Nov. 3, 31 units from 21 financial institutions were inspected, 38 officials were expelled from financial circles. Beijing is combating corruption on behalf of the people and international society.
PBOC cuts interest rates and reserve requirement ratio
In 2015, the PBOC cut interest rates and reserve requirement ratio several times to avoid economic deterioration and to save the stock market. The one-year lending rate was decreased to 4.35% and the one-year deposit rate stood at 1.5%. The reserve requirement ratio was lowered to 17.5%.
Easy monetary policy will continue as long as China's economic growth slows down, deflation exacerbates and capital outflows in the short-term. Yet room for the reserve requirement ratio cut is much larger than for interest rates.
China's macro-economy and financial markets may face increasing uncertainties. Accordingly, Beijing should take precautions. Economic structure reform should be accelerated to transform the industrial structure next year.
