China Hints at Pullback From Debt Crackdown as Markets Slide

(Bloomberg) -- China will try to avoid a "one-size-fits-all" policy as it tries to contain the nation's swelling debt, a central bank adviser said.

That's the latest signal of China softening its stance on the ongoing campaign to reduce financial risks, amid a market slump and economic slowdown. Regulators will focus more on structural deleveraging in the future and avoid overusing sweeping measures in cutting debt, according to a statement from Ma Jun, policy adviser to the People's Bank of China.

His comment on Tuesday came after a meeting of the Financial Stability and Development Committee of the State Council. That committee can help prevent a scenario in which "regulators move on their own and cause man-made overly-tight liquidity and even market panic" because of overlapping regulatory policies, Ma said.

Read More: China's Central Bank Faces Policy Bind Over Debt, Growth Goals

Ma Jun's comments carry weight because he's the former chief economist of the PBOC's research bureau who now serves on the monetary policy advisory panel led by Governor Yi Gang.

The financial stability committee, headed by Vice-Premier Liu He, met on Monday to approve a three-year plan for financial risk prevention. While that plan indicates that controlling debt is still an important policy target, the statement released after the meeting also said it'll keep liquidity “sufficient” and "properly handle the pace of regulatory work."

China's gigantic market has broad resilience and the nation has many “favorable conditions” in the “critical battle” against major risks and will be able to cushion external shocks, according to the committee's statement.

The committee was established in 2017 to improve policy coordination between government departments overseeing the financial sector. PBOC Governor Yi Gang is the deputy director, with members including officials from the Ministry of Finance and National Development and Reform Commission.

--With assistance from Miao Han.

To contact Bloomberg News staff for this story: Yinan Zhao in Beijing at yzhao300@bloomberg.net

To contact the editors responsible for this story: Jeffrey Black at jblack25@bloomberg.net, James Mayger

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