China to establish financial security review by 2020
China will establish financial security review and counter-sanction mechanisms by 2020, according to the draft outline of the 13th Five-Year Plan released Saturday.
Details about the mechanisms, only listed within a paragraph on the prudent opening up of the financial system, were not disclosed in the plan submitted to the national legislature for examination.
In a November article in the People's Daily, flagship newspaper of the Communist Party of China, central bank governor Zhou Xiaochuan mentioned the term "financial security review" as part of a national financial security mechanism to prevent systematic financial risks.
Financial security is important for overall national security, and the success of financial reform depends on maintaining financial security. Robust public confidence in the financial system is the basics of financial security, Zhou wrote. Moreover, The Chinese economy "faces relatively serious risks and challenges" but remains healthy, and policymakers have ample policy options at hand to cope with the "complicated situation" this year, said Xu Shaoshi, head of the National Development and Reform Commission, the top economic planning body, on Sunday.
"We should not use traditional and old methods to look at the Chinese economy," Xu said, referring to the downgrading of China's government credit ratings by the international rating agency Moody's on March 2. While its economic growth rate remains fast at 6.9 percent year-on-year in 2015, China's economic structure and quality have improved significantly, he said. A total of 13.12 million new jobs were created in 2015, exceeding the target of 10 million. People's incomes increased by 7.4 percent, faster than the GDP growth. Also, the growth of consumer inflation remained at a moderate 1.4 percent.
Meanwhile, China will be able to keep financial risks under control as financial processes develop, a senior official of China's cabinet research office said Saturday.
China's financial system is sound overall, although the overuse of some financial tools could cause certain risks, said Huang Shouhong, deputy director of the State Council Research Office, at a news conference.
The government pays high attention to potential risks, such as bad loan ratio increases, and many financial regulators have also taken specific measures to cushion against the risks, Huang said. Officials have vowed financial system reform will be more innovative, so that they will support the real economy. The government will encourage financial institutions to offer new consumer credit services to boost consumption, according to a government work report delivered by Premier Li Keqiang at the annual parliamentary meetings on Saturday.
The work report also encouraged banks to use both equity investment and loans to finance companies, a move that is considered helpful especially for early- stage firms seeking investment. China's consumption has contributed to 66.4 percent to GDP growth, signaling the headway China has made in making growth more consumption-driven and sustainable.