PBOC adviser: China not facing same pressure as Fed to shrink balance sheet

Sheng Songcheng, former director-general of statistics and research at PBOC and now an adviser to the central bank, wrote in the Shanghai Securities News, expressed his view on the need to shrink PBOC’s balance sheet.

Key Points via Reuters:

China's central bank will not take action to shrink its balance sheet like the US Federal Reserve as it does not face the same pressures due to its use of different policy tools

However, the PBOC's assets are mainly foreign exchange-based

Sheng noted: "The balance sheet structures of China and the United States' are very different," he wrote in the newspaper.”

"The PBOC does not have the huge portfolio of securities assets that need to be dealt with and foreign exchange accounts are impacted by capital flows, which can be hedged by adjusted other subjects,” he added.