China’s central bank warns against U.S., Western ‘suppression’

BEIJING -The People’s Bank of China said on Wednesday it will “appropriately” respond to U.S. and Western “containment and suppression”, in a rare warning by the central bank following calls by President Xi Jinping to safeguard national security.

It is unusual for the central bank to comment on foreign policy given its responsibility is finance, suggesting that China is signaling it is ready to deploy a wide range of countermeasures in response to increasing tension with the West.

The People’s Bank of China (PBOC) will “appropriately deal with the containment and suppression of the United States and the West”, the bank said in a statement published following an internal Communist Party committee study session.

Relations between the world’s two largest economies have been tense for years but worsened last month after the United States shot down a balloon off the U.S. east coast that it says was a Chinese spying craft.

While the U.S. has maintained it seeks to establish guardrails for the relationship, Xi has spoken of a need to “improve the national security system” and “build the people’s army into a great wall of steel that effectively safeguards national sovereignty, security and development interests”.

China last week announced sweeping government reform, including the establishment of a new financial regulatory body that would take over some supervisory functions from the PBOC.

The setting up of a national financial regulatory administration comes as Beijing seeks to rein in large corporate and financial institutions to shore up its economy in the face of “external shocks and risks”, as the foreign exchange regulator characterized the challenges facing the economy on Wednesday in a separate statement.

China to step up financing support for private small firms

The PBOC also said that it would “enhance the sense of distress and the spirit of struggle” while describing China’s foreign relations in its statement.

The anticipated shocks and challenges from outside would likely complicate policy-making this year as China emerges from three years of austere COVID-19 policies that have weighed on its $18 trillion economy.

The PBOC reiterated that it would step up financing for private, micro and small enterprises and that it will support reasonable bond financing needs of private companies.

In recent years, the government has sought to tighten its grip on private businesses, by taking stakes in non-state enterprises or installing officials in large firms.

“We will precisely and effectively implement the prudent monetary policy, keep an appropriate pace of loan issuance, and keep the total supply of money and credit at an appropriate amount and grow steadily,” the bank said.