No change in monetary policy: central bank(2)

Silk Road Fund to target strategic projects

"There is no hard boundaries geographically where the Silk Road Fund goes, relative programs are welcome to join as long as there's need," according to Jin Qi, head of Silk Road Fund.

This first private-equity fund has finished business registration and started operating and will keep selecting good investment opportunities in the process of development, according to Jin.

The Silk Road Fund will target medium- and long-term projects that have strategic significance to support the "One Belt, One Road" initiative, Jin said.

It will invest particularly in projects involving ecological solar panel manufacturing, clean energy and ecological remediation in China and other countries along the belt.

"We will support our domestic high-tech companies to cooperate with countries along 'the belt and road' and realize the mutual development and prosperity," Jin said.

Jin said the Silk Road Fund aims to cooperate with other private equity funds instead of competing with them or replacing them.

"The projects in general need a mix of debt and equity financing and provide more financing choices to projects that can achieve stable business returns in a medium- and long-term," Jin said.

Producer price index under control

China's producer price index (PPI) fluctuates wildly due to the country's "new normal", as well as being influenced by changes in global commodities trade, Zhou said.

China's existing monetary policy guarantees liquidity in the financial market, but is still moderate, Zhou said.

China will continue to keep an eye on the PPI trend. Downward pressure on PPI will be controlled by a proactive fiscal policy and monetary policy, Yi added.

Capital flight exists, but portion small

The majority of capital flow results from ordinary trade settlement and cross-border investment, while the number of capital flight from China is small, said Zhou.

Zhou said interest rate increase in the US will lure more investment in the US dollars, but is unlikely to open huge rooms for speculation and trigger a big threat.

Such interest rate increase will mean a significant recovery for the US economy, and will also send good signal to the whole world, added the governor.

Zhou said China is flush with international trade and investment, and companies and investors choose on their own the timing to settle their payment.

"The majority of the capital flow is soundly backed by normal trades and investment," he said , adding that capital chasing for the short-term speculative return exists but is not a serious issue for China.

Govt to study ways to boost private banks

China will study more detailed rules to boost the healthy development of private financial institutions, said Zhou.

The higher threshold for private banks is for the safety concern, as banks manage capital for customers, said Zhou.

The standard and condition to set up private banks should be definite, one important measure of which is whether they are capable of identifying and digesting risks. And stricter supervision is needed to insure all businesses comply with rules.

In addition, financial infrastructure, including payment, clearance and transaction measures should be in place for operation.

P2P lending needs tighter controls

New policy on regulating Internet finance is under discussion and drafting and will be carried out soon, Zhou said.

Unlike Internet financing modes such as online payment, crowd funding and other Internet finance products that have been developing fast on a healthy path, peer-to-peer (P2P) lending business has seen many problems, Zhou said. Tightening the supervision in this industry will help better develop the business to better serve the customers.

However, the risks in this business can be hard to predict because the technology in Internet businesses develops fast, Zhou said.

"We cannot foresee the ever-changing Internet business thus we can only carry out regulations that adapt into the changing rules gradually," said Zhou, adding that "you have to think if you are prepared well enough for the risks when participating in such businesses."