From Deepening to Accelerating Xiao Gang Explaining the Connotation and Path of Financial Supply-side Reform

From Deepening to Accelerating Xiao Gang Explaining the Connotation and Path of Financial Supply-side Reform

China Finance Forty Forum on April 19, the Political Bureau of the Central Committee proposed to accelerate the structural reform of the financial supply side.

The structural reform of the financial supply side was first proposed during the collective study of the Political Bureau of the Central Committee on February 22 this year. At that time, the term was “deepened”, and two months later, “deepened” became “accelerated”.

What’s the meaning behind it?

  On April 20th, the 11th Anniversary Celebration of the China Finance 40 Forum (CF40)-2019?

The forty people’s annual meeting and thematic seminar “Changing and Resolving Bureaus: The Next Journey of China’s Economic and Financial Reform” are emerging in Beijing.

At the meeting, CF40 senior expert Xiao Gang pointed out that the connotation of financial supply-side structural reform mainly has four points: First, focus on the supply side, not the demand side of credit expansion.

  Second, focus on both service functions and service quality and efficiency, rather than large-scale extensive operations.

  Third, focus on the effective matching of precise supply and demand, rather than increasing ineffective and inefficient supply.

In general, there is a contradiction between excessive money and structural imbalances, whether it is money supply or credit supply.

  Fourth, focus on institutional reform and mechanism conversion, rather than simply equating policy implementation and alternative means.

  Regarding the current relationship between overall supply-side structural reforms and financial supply-side reforms, Xiao Gang believes that financial reforms should serve economic reforms, but economic reforms will also bring challenges to the financial industry, including structural deleveraging and zombie enterprise processing.Wait.

He pointed out that the structural reform of financial supply side is in parallel with the prevention and mitigation of financial risks, and there are several points to be grasped in the current process of risk prevention.

  First, on the basis of stable growth, in the expected development, prevent and mitigate risks.

If there is no certain growth and no expected development, this risk cannot be prevented in the end.

  Second, to prevent and control risks, we must grasp the rhythm and intensity, be consistent, controllable, orderly, and appropriate.

  Third, prevention and control of financial risks must be driven by reforms, with special attention to strengthening the foundation.

Speed up the construction of financial infrastructure, do a good job of comprehensive statistics of the financial industry, and improve the information system and credit punishment mechanism.

  Fourth, “managing people, keeping money, and tying up the institutional firewall” is both the content of reform and the guarantee to promote reform and prevent and control risks.

  Fifth, in promoting reform and opening up, we must improve our financial management capabilities and our ability to prevent and control risks.

  The following is the actual record of Xiao Gang’s speech, which has been reviewed by the author.

  General Secretary Xi Jinping first proposed to deepen financial supply-side structural reforms during the collective study of the Political Bureau of the CPC on February 22, 2019.

On April 19, when the Political Bureau of the Central Committee studied the economic expectations for the first quarter, it was required to accelerate the structural reform of the financial supply side.

The nature of structural reform of the financial supply side can be seen.

General Secretary Xi has carried out financial supply-side structural reforms based on a profound summary of the nature and operating laws of finance, especially on the basis of a deep analysis of the development and changes in the financial industry since the 18th National Congress of the CPC.

The speech on financial work at the February meeting was the further enrichment and development of General Secretary Xi’s new ideas and new requirements on financial work.

  The central transition of financial supply-side structural reform is the adjustment and optimization of the financial system structure. At the same time, a two-way goal of strengthening financial service functions and precision financial services is proposed.

The first objective, in addition to strengthening the function of financial services to the real economy, also proposes a function of serving the people’s lives.

In addition, it has explicitly proposed the need for precise financial services, which involves the establishment of a multi-level, wide-coverage, differentiated, customized, and reasonable and efficient financial system.

Focusing on this central interest rate, the issues of financing structure, financial institution system, financial market system, and product system have been further raised.

This important speech set the direction for deepening financial reform and opening up.

  What is the connotation of financial supply-side structural reform?

  First, focus on the supply side, not the demand side of credit expansion.
Flood flooding cannot be implemented as soon as it represents the function of financial services to the real economy. The central government’s requirements have always been very clear, but not flood flooding at the same time.

In the first quarter of 2019, bank loans increased by 6 trillion yuan, and social financing increased by 8 trillion yuan, so the question of flooding flooded again.

I understand that financial reform is focused on the supply side, not on credit expansion.

  Second, focus on both service functions and service quality and efficiency, rather than large-scale extensive operations.
This is very clear.

  Third, focus on the effective matching of precise supply and demand, rather than increasing ineffective and inefficient supply.In general, there is a contradiction between excessive money and structural imbalances, whether it is money supply or credit supply.

  Fourth, focus on institutional reform and mechanism conversion, rather than simply equating policy implementation and alternative means.

Monetary and credit policies and macro-scale measures are constantly adjusted according to the economic and financial situation. The financial sector has gradually worked on merging these policies and restructuring measures. However, these cannot replace reforms, but still focus on the transformation of institutional mechanisms.

  Why deepen 深圳桑拿网 the structural reform of the financial supply side is first and foremost the need for changes in domestic and foreign economies.

  In 2013, the Party Central Committee proposed a period of shifts in economic growth, a period of structural adjustment, and a “three phases” of digestion of stimulus policies.

Since 2014, downward pressure on the economy has increased.

From about 2014 to 2016, it was in a period of relatively loose policy, including lowering of rations and interest rates, relaxation of restrictions on real estate purchases, down payment and loan restrictions, etc.

By the second half of 2016 and 2017, the supply-side structural reforms of the economy were launched.

Fundamentally, the momentum of global economic recovery is also increasing.

Therefore, in the second half of 2016, both domestic and international economic development was relatively fast.

However, in 2018, the expected mutations are also due to various factors, leading to the superposition of multiple internal austerity effects, causing difficulties in 2018.

Therefore, the structural reform of the financial supply side is based on changes in economic indicators at home and abroad.

  The economic work in 2019 mainly grasps the three major relationships.

  First, we must coordinate domestic and international relations.

Where is the foothold?

Concentrate on doing your own thing.

Second, we must grasp the relationship between steady growth and risk prevention. Where should we settle?

The economy must not be allowed to slip out of a reasonable range, which is a GDP growth rate of 6% to 6.

5%.

Third, handle the relationship between the government and the market, and gradually reform and open up to stimulate the vitality of the market itself.

  First of all, it is the stability of the word, the need for progress in stability.

Stable finance, stable foreign trade, stable foreign countries, stable investment, stable expectations, stable employment.

There are also “six stability” in stable finance, stable liquidity, stable social integration, stable stock market, stable debt market, stable exchange market and stable housing market. These are the six aspects of maintaining financial stability.

To achieve the requirements of the central government’s six stability and financial stability, there is an urgent need to accelerate the structural reform of the financial supply side.

  Thirdly, it is the need of economic level and industrial development stage.

The proportion of direct financing in high-income and middle-income economies increased.

The uncertainty and rapid changes of the innovative and creative economy make risk sharing and benefit sharing a direct financing advantage.

The rule of law, culture, and credit systems promote direct financing.

Interest rate, exchange rate, capital exchange, and comprehensive management reforms are driving changes in financial structure.

Based on the current stage of economic development, the level of economic development and the stage of industrial development, there is an urgent need to promote structural reforms on the financial supply side.

  What is the relationship between economic supply-side structural reform and financial supply-side structural reform?

  Financial supply-side structural reform is part of the economic supply-side reform. Financial reform must be subordinated to serve economic reform.

At the same time, the two promote each other.

If economic supply-side reforms are not effectively implemented, it will also be difficult for financial supply-side reforms.

The supply-side structural reform of the economy provides both possibilities and challenges for the financial industry.

An important goal of the structural reform of the supply side of the economy is to have the vitality of the micro-subjects and the level of the industrial chain to be improved.

This has created a good environment for the development of the financial industry and is worthy of an alternative foundation.

  But at the same time, we should see that the supply-side structural reform of the economy will bring challenges to the financial industry.

This challenge includes structural deleveraging and disposing of zombie businesses.

Practically speaking, the speed of zombie companies is still relatively slow. If we speed up the processing speed, it will have a great impact on our financial industry and our asset quality.In addition, the potential risks of local hidden debt are still very large, and the disintermediation of funds has brought great pressure on the transformation of the financial industry and the prevention of financial risks.

  Financial supply-side structural reform is in parallel with preventing and mitigating financial risks, with the same goals, mutual penetration and coordination.

The goals of both sides are to promote economic growth and to overcome the middle income trap.

There are several points to be grasped in the current process of risk prevention.
  First, on the basis of stable growth, in the expected development, prevent and mitigate risks.

If there is no certain growth and no expected development, this risk cannot be prevented in the end.

  Second, to prevent and control risks, we must grasp the rhythm and intensity, be consistent, controllable, orderly, and appropriate.

This puts higher demands on the financial industry to deleverage and prevent risks, and it also sums up the lessons learned in 2018.

We have some problems in order and appropriateness. In the future, we must pay attention to grasping the rhythm and strength.

  Third, prevention and control of financial risks must be driven by reforms, with special attention to strengthening the foundation.
Speed up the construction of financial infrastructure, do a good job of comprehensive statistics of the financial industry, and improve the information system and credit punishment mechanism.
  Fourth, “managing people, keeping money, and tying up the institutional firewall” is both the content of reform and the guarantee to promote reform and prevent and control risks.

  Fifth, in promoting reform and opening up, we must improve our financial management capabilities and our ability to prevent and control risks.
  Finally, how to implement financial supply-side structural reforms?

  We must implement the eight-character policy.

The Eight Character Guide is “Consolidate, Enhance, Enhance and Unblock”.

Consolidation is to consolidate the results of deleveraging and managing chaos in the financial industry.

There is indeed a lot of work to be done in this regard.

In terms of enhancing service capabilities, innovation capabilities, and management capabilities, the financial industry also needs to increase its efforts.

In terms of improvement, it is very important to improve our consciousness of incorporating new development concepts, focusing on matching financial supply with effective demand, thereby improving asset quality and service levels.

In terms of unblocking, it is mainly to unblock monetary policy mechanisms and strive to achieve three virtuous cycles: a virtuous cycle of finance and the real economy, a virtuous cycle of finance and real estate, and a virtuous cycle within the financial system.

  To implement the structural reform of the financial supply side, one of the keys is to enhance the sense of urgency and mission of financial reform and opening up.

Why ask this question?

At present, China’s financial strength continues to increase, and China’s four major banks are ranked first in the world’s top ten banks in 2018.

Looking back on the history of the past 100 years, in 1913, the top 20 banks in the world were mainly British, and in addition to banks in other European countries, there were not many banks in the United States.

By the 1950s and 1960s, US banks overlapped with major parts of the 20 largest banks in the world.

By the 1980s, Japanese banks had come to the forefront.

To this day, China’s banking industry has also moved ahead.

This achievement is shared by all.

  Judging from the development of small and medium-sized financial institutions, the overall situation is also stable.

Reforms in many past situations have been forced. Looking back at the history of financial reforms, it is only when there are many problems and even crises that there is a motive force for reform.

So, when China ‘s current financial crisis is relatively stable and the strength of the financial industry continues to increase, how can it enhance the sense of urgency and mission of reform?

This is a big problem we face.

  The requirements for the new round of financial reform and opening up are very high.

The most important thing is to have a sense of urgency, a sense of mission, and the pursuit of self-confidence and self-improvement, to improve the level of financial reform and opening up, enhance international competitiveness, take the road of financial development with Chinese characteristics, and formulate international financial governance and rules.Contribute Chinese wisdom and solutions.