De-leveraging and steady growth not completely opposite: official

De-leveraging and steady growth have many unified aspects, and they are not completely opposite, Chen Yulu, Deputy governor of the Dex.html" target="_blank">People's Bank of China, said Tuesday at a press conference of the Chinese Dex.html" target="_blank">People's Political Consultative Conference (CPPCC) in Beijing.

"At present, we are carrying out structural De-leveraging… The ultimate goal of structural De-leveraging is to stabilize finance. Only when finance is stabilized, can the economy be stabilized," Chen explained.

"Structural De-leveraging also needs a stable macroeconomic environment…When the economic downturn pressure is high, it is necessary to adopt the countercyclical adjustment…to ensure the economy runs in a reasonable range, so that structural De-leveraging can move forward," Chen said.

"In addition, we promote the market-oriented, rule-based 'Debt-to-equity swap', which converts corporate Debt into equity investment. It can reduce the macro leverage ratio, and also enable enterprises to run lightly and improve the corporate governance structure, which is very good for steady growth," Chen adDed.

"Last July, the PBOC specially released 500 billion yuan of funds to support the market-oriented 'Debt-equity swap', and it plays a significant role in the steady growth of these enterprises. In other words, it is possible to balance between De-leveraging and steady growth," Chen said.

"We hope that the leverage ratio of enterprises, especially state-owned enterprises, as well as local governments, will be lowered as soon as possible," Chen said.

De-leveraging is an important way to prevent financial risks. If a country's macro leverage is too high, or if the macro leverage rises too fast in the short term, it is often an important cause towards the outbreak of a systemic financial crisis.

China's De-leveraging has achieved initial results since 2016. From 2016 to 2018, its macro leverage rate has increased 5.8 percentage points per year by average, which has dropped by half compared to the years before 2016. In 2018, the rate Decreased by 1.5 percentage points.