Christopher Beddor, analyst at Eurasia Group, said that China's pledge to focus on the stable development of its capital markets will slow down the implementation of financial reforms as the country tries to balance domestic needs and the financial liberalization.
At the weekend, China Securities Regulatory Commission (CSRC) chairman Liu Shiyu said that China will focus on stable development of its capital markets this year, although it will continue to open its markets to foreign investors.
Previously, Liu warned that the CSRC would take down law-breaking financial companies and would not let them profiteer from retail investors.
According to Beddor, markets await IPO financial reforms, which will allow Chinese companies to attract investments through equity capital rather than debt. The new IPO mechanism, which was aimed at giving market a bigger role in valuations, was postponed after a stock market crash in June 2015.
At the moment, China attempts to limit capital outflows to back the yuan, while regulators keep their eyes on policy changes in the United States.
According to the Institute of International Finance (IIF), outflows from China surged to a record $725 billion in 2016. The pace could accelerate in case US companies face political pressure from China with a purpose to repatriate its profits.
