Comments from Chinese Vice-Premier Liu He, who chaired a meeting of the Financial Stability and Development Committee

The Financial Stability and Development Committee, which comprises some of President Xi Jinping’s must trusted officials, convened to discuss economic threats and “external risks”, according to a statement published late on Tuesday on the government’s website.

While it did not directly mention China’s long-running trade dispute with the US, it appeared to reference it by saying the country has “favourable conditions to win big risk control battles and cope with external risks”.

The Financial Stability and Development Committee

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One such development has been the rising influence of a key new economic body, which has largely been overlooked during this National People’s Congress. It is called the Financial Stability and Development Committee (FSDC), and it will play a critical role in macroeconomic policymaking. What’s more, it should lead to more coordinated policies across the monetary, fiscal, and industrial spaces—giving China a powerful new macroprudential toolkit to avoid a financial crisis and fund its industrial policy priorities. Given that it will be headed by China’s most powerful economic official, Vice Premier Liu He, businesses, governments, and serious analysts would be wise to get better acquainted with the new committee.

The FSDC is a relatively new committee under the State Council, headed by the Vice Premier charged with the economic portfolio. Until last week, that person was Ma Kai, but now it is Xi’s go-to economist, Liu He. The fact that it is headed by a key lieutenant of Xi Jinping should demonstrate the import of the new entity, in and of itself. Indeed, its recent establishment appears to have effectively been undertaken with Liu’s pending leadership in mind.

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Mr. Ma himself is something of a lame duck, being past the age when Chinese officials typically retire. While he remains a vice premier in the Chinese government, he lost his seats on senior decision-making bodies within the Chinese Communist Party amid a broad reshuffle last month.

Still, the committee could be strengthened later, or more details may emerge that further outline its powers.

The decision to hold the committee as President Trump arrived in Beijing for a meeting with Mr. Xi may be an indication that the Chinese leadership is still focused on the country’s financial vulnerabilities, even if a long-term leader to address those vulnerabilities has not yet been chosen.

China’s stock market crash two years ago, and a subsequent flight of money that shaved about $1 trillion off its vast hoard of foreign exchange reserves, illustrated the weaknesses of the country’s financial system. While China has a vast cushion of savings and a still-considerable pile of foreign exchange reserves, its financial system has become increasingly reliant on debt. Critics say it also does a poor job of funneling money to small businesses and entrepreneurs who could spark new sources of growth.