New Growth in City’s Finances
Data shows that the Beijing Financial Development Index rose to 2,553.59 points from a baseline of 1,000 points in 2010, an increase of 8.64 percent compared with 2016.
On July 25, the Beijing Financial Development Centre and Peking University jointly issued the 2017 Report on the Beijing Financial Development Index. Data shows that the Beijing financial development index rose to 2,553.59 points from a baseline of 1,000 points in 2010, an increase of 8.64 percent compared with 2016. The capital's financial industry has made substantial achievements in “serving the real economy, preventing and controlling financial risks and deepening financial reform” to become the main driving force behind the city's economic growth.
Four-level Indicator System
The Beijing Financial Development Index is composed of four first-level indicators, 38 second-level indicators, 82 third-level indicators and 107 fourth-level indicators. The first-level indicators measure financial institutions, markets, innovation and the ecological environment, which together describe the development of Beijing's financial industry. In contrast with the previous year, an additional indicator— foreign security companies and trust companies—was added to the system, and more questions were added to the financial environment questionnaire.
The Beijing Financial Development Index from 2010–2017 can be divided into three stages. The first stage (2010–2013) saw indicators grow at an average annual compound growth of 9.78 percent, and positive development trends were maintained; the second stage (2014–2015) was characterised by rapid growth as the average annual growth rate rose to 23.72 percent; and during the last stage (2016–2017), the average growth rate was 8.64 percent.
In 2017, three first-level indicators: financial institutions, financial innovation and financial environment all increased; whereas the financial markets indicator declined. Among these, financial innovation saw the fastest growth, rising to 4,706.72 points from 3,771.74 points in 2016, an increase of 24.79 percent; and financial institutions and financial environment, rose by 7.49 percent and 5.88 percent compared with 2016, respectively. After the rapid growth in 2015 and turbulence in the financial markets, the growth rate of financial markets, financial institutions and financial environment continued to decline. However, the financial innovation index is growing steadily.
Financial Development: Six Highlights
The Beijing Financial Development Index aims to scientifically evaluate the development of, and analyse changes and problems within, Beijing's financial industry. Wang Yiming, professor at the Peking University's School of Economics and director of the Financial Innovation and Development Research Centre, identified six highlights from the index regarding Beijing's financial industry.
Developments in Financial Innovation
The index showed that financial innovation based on cultural finance and green finance has become the main driving force in the development of Beijing's financial industry.
In 2017, Beijing's cultural finance achieved rapid growth and its indicator rose six-fold from 1,000 points in 2010, to 7,415.4 points in 2017. Green finance ushered in a “golden period of development.” Beijing issued 28
green bonds valued at 93.5 billion yuan, a year-on-year increase of 27.53 percent and ranking first in China. The city also supported inclusive finance practices and the renovation of substandard housing was completed ahead of schedule, while investment in major projects and people's livelihood projects increased, and fintech better served the real economy.
Enhanced Risk-resisting Ability
The reform of financial institutions is progressing steadily, and finance's abilities to serve and resist risks have improved. In 2017, Zhongguancun Bank, the first private bank in Beijing, and Aibank, China's first direct bank, both opened, adopting the new financial model of “Internet Plus Finance.”
Finance also played an important role in deleveraging; the main business of deposits and loans increased; and credit and loans provided additional support to socioeconomic development.
Off-balance sheet business greatly decreased; non-performing loans declined in both required reserve rate and interest rate; the banking industry's risk offset ability was strengthened; the number of securities and futures institutions increased; progress was made in the listing and restructuring program; and the ability of futures companies to resist risks was improved. The number of listed companies on the New Three Board increased, the insurance industry achieved steady progress and insurance depth and density ranked first in China. The scale of funds and venture capital industry continued to rise; the threshold for starting businesses was raised; talent in the fields of artificial intelligence and big data increased hugely; and financial supervision helped the standardised and sustainable development of financial institutions.
Sustainable and Steady Development
With the improvements in the capital's business environment, the financial environment achieved sustainable and steady development.
Beijing has continued to protect investors' lawful rights and interests; implemented strict and comprehensive supervision measures; and taken steps to deal with abnormal issues such as Bitcoin trading and cash loans. At the same time, financial infrastructure has been improved; the construction of distinctive financial functional zones was advanced; and space for Financial Street was expanded in order to promote integrated development with the Lize Financial Business District. The subcentre in Tongzhou has prioritised the development of financial value-added services to promote the coordinated development of Beijing, Tianjin and Hebei Province and develop emerging finance. Financial institutions have seen increased competition, and Beijing has issued policies to promote the industry's development. This will help further reform and opening up in the industry, prevent and ward off financial risks, and optimise the structure and business environment for financial functional areas.
Improved Financial Environment
In 2017, Beijing made improvements to its environment for financial services, social credit and financial talent. Residents' financial awareness was improved and the city ranked first in China with regard to for many indicators. According to the 2017 Report on China City Commercial Credit Environment Index (CEI), Beijing's commercial environment has ranked first for five consecutive years. In 2017, the number of people employed in the financial industry in Beijing reached more than 500,000, ranking first in China. The city's insurance density and depth were 9,080 yuan and 7.05 percent, respectively, raking top, and the gap behind major world cities was narrowed.
In 2017, Beijing issued a series of economic and investment policies to promote the further opening up of the financial service industry and standardised financial development. It loosened market access, reformed supervision models and improved the market environment. Beijing's experimental zones for furthering the opening of financial service industry become an important piece in the country's overall opening up.
With the further opening up and internationalisation of Beijing's financial industry, overseas finance has become an important force for supporting the development of the capital's finances. The Asian Financial Cooperation Association (AFCA) was founded on July 24, 2017 in the wake of the Asian Infrastructure Investment Bank, Silk Road Fund and China-africa Development Fund. To date, the association has 107 members from more than 20 countries on five continents, covering banking, securities and other fields.
The index and growth rate for the financial markets fell, mainly caused by a decline in the bond market and money market index. The drop also caused a ratio change in other sub-indexes.
With the decline in the amount of bond and bill financing, the relative proportion of trust issuing increased, showing a structural adjustment in market financing methods. The amount of financing from stock markets dropped compared with 2016, however it exceeded that from bond markets for the first time in recent years. This meant that more capital was invested in supporting the development of the real economy and macro regulations were working. Professor Wang Yiming explained: “Macro regulations and supervision have a short-term impact on financial markets but enhance market standardisation in the long run, laying the foundation for the sustainable and sound development of financial markets.”
Skyscrapers on Beijing Financial Street