(Yicai Global) Nov. 6 -- Policy will not change suddenly even though an end to economic support measures introduced in response to the Covid-19 pandemic will be necessary and inevitable, according to the vice governor of the People’s Bank of China.

The timing and manner of their withdrawal needs to be carefully studied, Liu Guoqiang said at a press conference today, adding that policy changes should be based on an accurate assessment of economic conditions.

Finance serves the real economy, and economic conditions determine how financial policies should be adapted, he said. The effect of financial services on the real economy should not be weakened and the real economy should be served well.

Special policies introduced during exceptional times need to be adjusted in due course, said Sun Guofeng, director of the PBOC’s monetary policy department.

Subsequent monetary policy will be more flexible, moderate and precisely-oriented, Sun said. Policy support will be stepped up in those areas requiring long-term assistance.

The intensity, rhythm and focus of the policies will be adjusted according to how the situation develops and changes in market demand, Sun said.

Shadow Banking

At the same press briefing held by the central bank and other financial regulators, the China Banking and Insurance Regulatory Commission’s Chief Lawyer Liu Shoufu said the CBIRC attaches great importance to the supervision of shadow banking, or non-bank financial intermediaries that provide services similar to conventional banks.

Thanks to the intervention of the CBIRC the number of irregular interbank, wealth management and off-balance-sheet businesses has dropped and the scale of shadow banking has shrunk by CNY20 trillion (USD3 trillion) from its historical peak.

International organizations and professional institutions speak highly of the CBIRC’s work, saying that China has reduced the risk of shadow banking and maintained the stability of the financial system, Liu said.

The CBIRC supports reasonable innovation in the financial sector so long as the risks are controllable, Liu said. Fintech falls under the supervision umbrella of the commission as it is a part of finance. Innovation must serve and contribute to the real economy, he added.

Editor: Kim Taylor