New Growth in City’s Fi­nances

Beijing (English) - - CONTENTS - Trans­lated by Zhou Fu­jing Edited by David Ball Photo by Yang Yuechen

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.

En­hanced In­ter­na­tion­al­i­sa­tion

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.

Struc­tural Trans­for­ma­tions

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

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