Xi launches fi­nan­cial re­forms

Main­tain­ing sta­bil­ity, serv­ing the real econ­omy, ex­pand­ing re­vi­sions cru­cial

China Daily (Hong Kong) - - FRONT PAGE -

China un­veiled re­form plans on Satur­day to im­prove the fi­nan­cial sec­tor’s ca­pa­bil­i­ties and serve the real econ­omy while guard­ing against sys­temic risks.

China must strengthen the lead­er­ship of the Com­mu­nist Party of China over fi­nan­cial work, stick to the ba­sic tone of seek­ing progress while main- tain­ing sta­bil­ity and re­spect the rules of fi­nan­cial devel­op­ment, Pres­i­dent Xi Jin­ping said at a two-day Na­tional Fi­nan­cial Work Con­fer­ence that ended on Satur­day.

The con­fer­ence has been con­vened ev­ery five years since 1997 and is widely con­sid­ered to set the tone for fi­nan­cial re­forms.

Three tasks were high­lighted in the meet­ing, in­clud­ing mak­ing the fi­nan­cial sec­tor bet­ter serve the real econ­omy, con­tain­ing fi­nan­cial risks and deep­en­ing fi­nan­cial re­forms.

Serv­ing the real econ­omy is the bound duty and pur­pose of the fi­nan­cial sec­tor and the fun­da­men­tal way to guard against fi­nan­cial risks, Xi said.

The fi­nan­cial sec­tor should im­prove ser­vice ef­fi­ciency and qual­ity and chan­nel more re­sources into ma­jor and weak ar­eas of eco­nomic and so­cial devel­op­ment, he said.

De­vel­op­ing di­rect fi­nanc­ing will be pri­or­i­tized while the in­di­rect fi­nanc­ing struc­ture should be op­ti­mized by ac­cel­er­at­ing strate­gic trans­for­ma­tion of state-owned ma­jor banks and de­vel­op­ing small and medium-sized banks and pri­vate fi­nan­cial in­sti­tu­tions, Xi said.

Re­it­er­at­ing the role of the fi­nan­cial sec­tor points out its devel­op­ment di­rec­tion, and emphasis on di­rect fi­nanc­ing also is re­as­sur­ing for the stocks and bond mar­kets, ac­cord­ing to Li Huiy­ong, a se­nior an­a­lyst with Shen­wan Hongyuan Se­cu­ri­ties.

Xi said guard­ing against

sys­temic fi­nan­cial risks is the eter­nal theme of fi­nan­cial work and the gov­ern­ment should make a stronger ef­fort to mon­i­tor, warn against and deal with risks in a timely man­ner.

China will ac­cel­er­ate de­vel­op­ing laws and reg­u­la­tions gov­ern­ing the fi­nan­cial sec­tor, im­prove macro pru­den­tial man­age­ment and em­pha­size func­tional as well as be­hav­ioral reg­u­la­tion, Xi said.

The gov­ern­ment will con­tinue to delever­age the econ­omy by firmly tak­ing a pru­dent mon­e­tary pol­icy and mak­ing it a pri­or­ity to re­duce lever­age in state-owned en­ter­prises, Xi said.

The coun­try also will deepen fi­nan­cial re­forms, in­clud­ing im­prov­ing fi­nan­cial reg­u­la­tion co­or­di­na­tion and shoring up weak links in su­per­vi­sion.

China will set up a com­mit­tee un­der the State Coun­cil to over­see fi­nan­cial sta­bil­ity and devel­op­ment and the cen­tral bank will play a stronger role in macro pru­den­tial man­age­ment and guard­ing against sys­temic risks, Xi said.

The in­tro­duc­tion of the State Coun­cil fi­nan­cial sta­bil­ity and devel­op­ment com­mit­tee will help im­prove reg­u­la­tion ef­fec­tive­ness and ad­dress reg­u­la­tion chal­lenges brought by in­creas­ingly mixed fi­nan­cial ser­vices, ac­cord­ing to Lian Ping, chief econ­o­mist at the Bank of Com­mu­ni­ca­tions.

Re­form­ing the fi­nan­cial reg­u­la­tion frame­work should be based on China’s do­mes­tic con­di­tions and all fi­nan­cial busi­nesses will be put un­der su­per­vi­sion, ac­cord­ing to Premier Li Ke­qiang.

The world’s sec­ond-largest econ­omy will fur­ther open up its fi­nan­cial mar­ket to pro­mote the in­ter­na­tion­al­iza­tion of the yuan and cap­i­tal ac­count con­vert­ibil­ity in a steady pace, Xi said.

China also will in­crease ef­forts to im­prove le­gal frame­work, credit mech­a­nisms and tal­ent devel­op­ment for the fi­nan­cial sec­tor to help the Chi­nese econ­omy ex­pand steadily, Li said.

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