BEIJING: Chinese financial regulators on Wednesday moved swiftly to implement tasks set by the top-level, tone-setting central financial work conference, including announcing new regulations for commercial banks and vowing to take measures to defuse risks and ensure sound and stable development.
The two-day conference, which concluded on Tuesday, offered a clear path for the financial industry to tackle risks, including the housing market and local government debts, and ensure long-term high-quality financial development, which is in line with market expectations and will boost confidence, analysts noted.
The central financial work conference, the first such national level financial work conference in six years, set priorities for policymaking in the financial industry, now and in the future. Among the major takeaways were calls for strengthening the Communist Party of China (CPC) Central Committee’s leadership in financial work, preventing and defusing financial risks, and promoting high-quality financial development.
On Wednesday, the National Administration of Financial Regulation (NAFR) issued new guidelines for the capital management of commercial banks, which contained measures to strengthen the supervision of commercial banks so as to prevent risks.
In a statement on its website, the NAFR said that the new guidelines, which are set to take effect in 2024, heed calls from the central financial work conference to comprehensively strengthen supervision, and they are a move to improve the capital regulatory requirements for commercial banks, promoting banks to strengthen their risk management levels.
Also on Wednesday, officials from China’s financial regulatory agencies swiftly responded to various tasks set at the conference.
An official from the People’s Bank of China (PBC) said that the central bank will carry out the requirements of the conference to the letter, adhere to the political and people-oriented nature of financial work and adopt a prudent monetary policy, China Media Group (CMG) reported on Wednesday. The PBC vowed to promote the development of the financial market, optimize financial structures and improve financial services.
The conference stressed that efforts should be made to effectively strengthen high-quality financial services for major strategies, key areas and weak links. It also called for more financial resources for technological innovation, advanced manufacturing, green development and small and medium-sized enterprises.
In a report released on Wednesday, the PBC said that the balance of yuan loans to financial institutions stood at 234.59 trillion yuan ($32.05 trillion), at the end of the third quarter, up 10.9 percent year-on-year, a stable rate of growth.
Loans for key areas such as industry and services, small businesses, green development and high-tech enterprises maintained significant growth. As of the end of the third quarter, green loans in both yuan and foreign currency terms surged by 36.8 percent year-on-year.
The China Securities Regulatory Commission (CSRC) vowed to meet various requirements announced at the conference. The CSRC said that it will adhere to the path of financial development with Chinese characteristics and accelerate the construction of a safe, standardized, transparent, efficient, dynamic and resilient capital market, according to CMG on Wednesday. It will also effectively and methodically defuse risks in key areas and guard against systemic financial risks.
Noting that there are still many hidden economic and financial risks, the central financial work conference stressed that preventing and defusing financial risks must be the eternal theme of the financial sector.
Also on Wednesday, the State Administration of Foreign Exchange said that it would steadily expand institutional opening-up, strengthen foreign exchange management and improve cross-border investment and financing facilitation – all tasks set at the conference.
Cheng Shi, chief economist of ICBC International, said that the conference played a crucial role in various aspects of the country’s financial development, including setting the direction going forward, tackling risks, improving competitiveness and capabilities, and boosting market confidence.
“The meeting highlighted several key points for China’s financial stability and long-term development,” Cheng told the Global Times on Wednesday, pointing to a clear direction, an elevated position and a firm stance, among others, for the financial industry.
The conference stressed that finance is the lifeblood of the national economy and an important component of national core competitiveness. It called for following the centralized and unified leadership of the CPC Central Committee.
Noting the conference was the first after China in March adopted an institutional reform plan that included the establishment of the Central Financial Commission, Lian Ping, chief economist at Zhixin Investment Research Institute, told the Global Times that the meeting underlined the CPC Central Committee’s centralized and unified leadership in financial work.
Analysts said that the strengthening of the CPC Central Committee’s leadership will help effectively implement policy and reform measures and ensure stable and sound development. The meeting also stressed that the CPC Central Committee’s centralized and unified leadership is the fundamental guarantee for the development of the financial sector.
The conference also addressed specific risks in the Chinese financial industry that have drawn much attention recently. On the housing market, the meeting called for the improvement of the supervision system and capital supervision of real estate enterprises, and meeting the reasonable financing needs of real estate enterprises of different ownerships without discrimination. It also called for the establishment of a long-term mechanism to prevent and resolve local debt risks.
“Regarding the issue of debt, one of the highlights is the emphasis on establishing a long-term mechanism,” Feng Jianlin, chief economist at Beijing FOST Economic Consulting Co, told the Global Times on Wednesday, adding that such a mechanism will help coordinate and manage debts in a reasonable manner.
