Liu Zhiqin, a senior fellow at the Chongyang Institute for Financial Studies of Renmin University of China, was interviewed by CCTV Global business programme on stock connection and consumer confidence on Aug.17th.
Q. What do you think about the new program between Shenzhen and Hong Kong?
A. For the last two years we have been preparing for this program and now people have high expectation on the connection of the stock markets. I think the time is very critical and interesting for Chinese economy`s development. In the past six months the data of the office are very positive to attract international investment. The central government gave the announcement at this time to give confidence to the market, because people always manipulate the past months to tell when to put their money into the market. So I think the time is quite important, especially in July when central government has important conferences. So the government would give the market confidence showing that the reform of stock market is under control and at exact time as people wish.
Q. Shanghai-Shenzhen program is two years old, how can the new program learn from that?
A. Geographically, Shenzhen is close to Hong Kong. In terms of cultural background and the economic bonds Shenzhen is also closer to Hong Kong than Shanghai. At first people have very high expectation on the connection between Shanghai and Hong Kong stock markets, and the economic was very stable. This is good for both sides. The quota for each side is 500 billion yuan in total, but I do not think that the quota was fully used because people are concerned about get connected with law system, inhabitance of the investment and how to build up confidence and trust between two markets, because the cultural background and the business behavior are totally different. As Li Keqiang said, which is impressive: Hong Kong market is a law ruled market. That means the mainland is still on the way of learning. Chinese mainland market is law regulated market. In the last few years there was huge turbulence in China`s stock market because the pricing mechanism is not well established. So I think for the both sides there are a lot to learn from the law system.
Q. Why do you think Chinese consumers are so keen and so confident to spend?
A. In Chinese market at present, we haven`t found a engine to drive the economy. Actually we need a new pumper to pump the new confidence in the market. The slowing down of the economy hasn`t influenced the living standard of people seriously, because there is something that could absorb the pressure from the slowing down of the market. So the confidence of the consumers is always high. China has the background of saving, and they are aware that the cutting down of interest rate makes saving a loss. So that made a new philosophy of consumption. I hope that such confidence would remain for another 10years and that would promise China a good future.
Q. What do you think of Chinese economic status according to the trade figures?
A. The price of commodity and oil is downing. The price decrease of oil and gas will make the trade of other items increase. I think now the commodity reserve is high in China. This will be good be China, but I think that the trading volume will increase in the near future.