BEIJING China's central bank has come under fire since last year's surprise currency devaluation for not explaining its policies to the markets, but its reticence is less a product of poor PR than its limited powers and a speculative onslaught.
Unlike the U.S. Federal Reserve or European Central Bank, the People's Bank of China enjoys only limited operational independence, leaving its governor Zhou Xiaochuan to implement policies ultimately decided by the cabinet in Beijing, without the authority to lead debate, risk dissent or shed light on decision-making.
In such circumstances, silence is often the safest policy, though Zhou broke that silence in an interview at the weekend and expressed a willingness to improve communication.
Zhou has been especially sparing with words in the heat of battle with currency speculators as China's economy plumbs its slowest growth in 25 years, it eats through its reserves at a record pace and capital flows offshore.
"For speculators, the relationship is like opponents in a game," Zhou told financial magazine Caixin. "How is it possible for the central bank to tell them all its operational strategies? It's like playing a chess game, you cannot tell the opponent all your tricks."
After the PBOC engineered a near 2 percent depreciation in August, it said - and has repeated - that there is no basis for the yuan to keep falling, and that China would keep it stable versus a basket of currencies while allowing greater volatility against the dollar.
But it arranged another smaller drop in early January, and the currency is down about 5 percent over six months. Offshore, the yuan has at times been valued as much as 2 percent lower as speculators made a more pessimistic judgement.
In December, the PBOC launched an index on the yuan's exchange rate weighted against a basket of trade-related currencies, and the market has been keen to understand how that regime is managed.
The PBOC has not been forthcoming, prompting a ticking off last month from International Monetary Fund chief Christine Lagarde for a "communication issue, which markets do not like".
Zhou acknowledged the difficulties when he broke the silence in his weekend interview.
"The central bank has a clear and strong desire to improve its communication with the public and market," he told Caixin. "At the same time, it's not easy to do a good job in communication."
On key policy decisions, the PBOC does not publish full meeting minutes like the Fed or Bank of Japan to help manage market expectations, and it has yet to develop a market-based benchmark interest rate that might also give guidance.
"In terms of transparency, there are two areas – one is transparent operations and rules, another is forward-looking guidance. The PBOC cannot meet such requirements," said an economist at a top government think-tank, though he added that no central bank can be absolutely transparent, nor needed to be.
The PBOC declined to comment.
While global markets saw a big sell-off last week, China's markets were closed for the Lunar New Year celebrations, so Zhou's Caixin interview was full of pre-emptive reassurance about maintaining the reserves and the stability of the yuan, which contributed to the relative calm when markets re-opened on Monday.
"Communication between the monetary authority and the market is very important. Governor Zhou gave a long interview recently; I think it's a very good move," said Long Guoqiang, vice head of the Development Research Centre, the cabinet's think-tank.
Market analysts nevertheless are not expecting the PBOC to embrace Western-style policy transparency, and certainly not to reveal how much it could allow the yuan to fall or the "safe" floor for the country's foreign exchange reserves.
That would indeed make it a hostage to speculators.
"The central bank hopes to prevent speculative forces from influencing ordinary investors, but this is very difficult," said the think-tank economist.
Under such attack, there is no single right message.
"For different market players, the central bank's communication strategy is different,” Zhou told Caixin.
(Additional reporting by Samuel Shen and Nathaniel Taplin in SHANGHAI; Editing by Will Waterman)
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