US-China trade frictions impacting China’s equity market, says vice premier

Vice Premier Liu He discussed the recent trade and economic issues in a joint interview on Friday with Xinhua, People’s Daily and CCTV, China’s national broadcaster.

First, Liu said trade frictions between the United States and China had contributed to the slump in stock markets, although “psychological effect was bigger than factual consequences”. He told the state-run media the US and China are now “in touch”. Liu also admitted veering market expectations and uncertainties about the future economic environment all affected investors who’re concerned about issues like development prospects of the private sector and property rights protection.

Liu agreed at some level state-owned companies have easier access to funding than private businesses, because “there is misunderstanding and bias in executions.”

Some people with certain institutions think it’s safe to provide loans to state-owned companies, while they would rather save the trouble of lending to private enterprises citing political concerns, said Liu, noting the attitude and practice are totally wrong. He then urged for the kind of practices to be determinedly rectified.

About debate over the purported phenomenon of “state advancing, private sector retreating”, Liu refuted such claims as wrong and one-sided. “Some previously highly leveraged private businesses are now confronting liquidity difficulties. State-owned banks and enterprises are helping them to live through … I think this is a good thing. If private businesses now in trouble would become well again, the government capital could retreat,” he said.