Thomas J. Sargent, American economist, attends a panel discussion at the World Credit Rating Forum in Beijing, June 29, 2015. (Xinhuanet photo)
By Chao Luan
BEIJING, June 30 (Xinhuanet) – "The capital market in China has been and continues to be essential in the development process," said Thomas J. Sargent, American economist and 2011 Nobel laureate in economics.
He made the remarks during an exclusive interview with Xinhuanet on the sidelines of the World Credit Rating Forum in Beijing Monday. Sargent also shared his views on interest rates fluctuations and economic crisis.
Capital market is about resource allocation, and about transferring funds between savers and borrowers in an efficient way, he said, “it is a way matching savers and borrowers.”
In China’s capital market, the government has played a role in guiding it and making remarkable progress for years, he said.
The reform and opening-up of China’s capital market began following the third plenum of the 11th CPC Central Committee.
“They’ve done it in ways to increase competition and increase its role in capital markets. That’s a major development,” he added.
Talking about bank interest rate fluctuations, Sargent said that there are many factors will affect interest rates.
He noted, “The central banks are basically coping with conditions in the market. Ultimately, central banks have limited influence on interest rates. Interest rates are determined by other things, by how productive the economy is.”
When asked about the phenomenon of economic crisis issue, Sargent said, from history of market economy, there are two points worth attention. First, the crisis and austerity would happen and usually last about a year; second, it is difficult to predict when a crisis will happen. Though, “economic crisis can be effectively controlled through a variety of regulatory mechanism.”, he added.
On the discussions at the World Credit Rating Forum, he maintained, “The subject of this conference, that is try to have a private and public governmental regulations and signals. They will help us to manage it and make crisis less likely. And when they come, to make it easier to manage.”
