China vows to deepen supply-side structural reform in the financial sector and strengthen the sector's ability to serve the real economy during the Communist Party of China (CPC) Central Committee Political Bureau on Friday afternoon. This highlights the financial industry’s positioning in the national strategy.
The Chinese government will find the balance between keeping the market growth stable and reining the risks. More efforts will be made to work on risks effectively in critical areas. The world will see China as an open up market in the financial sector as reform is carried out. The country will gain a stronger capability to better serve the real economy. To be specific, the market will see changes in six major aspects.
Financial services to the real economy. China is creating new momentum to forge a strong domestic market. Private enterprises will find it easier to fund. Financial services will also serve the rural revitalization strategy to achieve more in targeted poverty alleviation. Public services will be actively supported, including the sectors for elder care, education and medical. The government will keep the profits of the financial industry at an average level and value will be generated from the real economy in the service industry.
The financial system is expected to be optimized. China will actively strengthen the structural reform of the supply side of the financial industry and focus on optimizing the financial institutions in the system. Reforms will be implemented in financing structure to continuously increase the proportion of direct financing, and reduce the cost of social financing. The structure of financial institutions will also be optimized. The ratio of non-bank financial institutions will be increased. While in the banking institutions, there will be more small- and medium-sized banking institutions, private banks and foreign-invested organizations. The financial market structure will also be optimized while carrying out the science and technology board and the pilot registration system. Small- and medium-sized investors’ rights and interests will be protected. Financial product structure will be fine-tuned in the trend of innovation economy trend.
More efforts will be made to rein in financial risk, especially systemic risks.
The dual-pillar regulatory framework of both monetary policy and macro-prudential policy will be improved.
The basic system of capital market construction will be consolidated, and financial operations will be regulated.
The world market will see a two way opening up in the financial sector.
China will further expand the multi-disciplinary financial industry, including opening-up in banking, insurance and securities industries.
Meanwhile, China will improve its own international competitiveness and foster financial markets with international influence.
China will develop financial technology to adapt to the remarkable changes brought about by technology including big data and artificial intelligence.
The level of financial technology will be improved to serve the real economy with more efficiency.
The improvement in financial technology is also expected to drive development of financial products to be more innovative in service channels and business models.