China’s central financial work conference emphasises strengthening supervision and promoting high-quality development

Photo credit: Xinhua

1st November 2023 – (Beijing) The central financial work conference concluded on Tuesday, setting forth key priorities to comprehensively strengthen financial supervision, improve the financial system, optimise financial services, and prevent and resolve risks. This two-day conference, held once every five years, is highly anticipated as it shapes China’s financial policymaking direction for the coming years. Against a backdrop of global economic challenges and financial risks, the conference addressed various pressing issues, including the housing market and local government debts, while outlining strategies for achieving high-quality development.

During the conference, Xi Jinping, the General Secretary of the Communist Party of China Central Committee, delivered a significant speech. Xi, who is also the Chinese President and Chairman of the Central Military Commission, analyzed the current situations and future prospects for the financial sector’s high-quality development. The conference underscored the determination of top policymakers to ensure stable and sound growth in the financial industry, boosting confidence in both China’s financial sector and the overall economy.

Recognizing the vital role of finance as the lifeblood of the national economy and a crucial component of national core competitiveness, the conference called for the establishment of a financial powerhouse. It emphasized the need for strengthened financial supervision, an improved financial system, optimized financial services, and effective risk prevention.

The conference acknowledged the significant achievements made in China’s financial development since the 18th CPC National Congress. However, it also highlighted the presence of hidden economic and financial risks, low quality and efficiency of financial services, persisting issues of illegal financial activities and corruption, and relatively weak financial supervision and governance capabilities. To address these challenges comprehensively, the conference emphasized the necessity of resolving fundamental issues within the financial system.

One notable aspect of this year’s conference was its focus on tackling challenges and risks faced by the financial industry, including the housing market and local government debts. Guan Tao, the Global Chief Economist at BOC International under Bank of China, praised the conference for directly addressing these issues and providing detailed plans to tackle the challenges.

Regarding local government debt risks, the conference called for the establishment of long-term mechanisms to prevent and resolve such risks. It also emphasized the need for a government debt management mechanism compatible with high-quality development. In the context of the housing market, the conference urged improvements in supervision and capital supervision of real estate enterprises, macro-prudential management of real estate financing, and fair financing opportunities for real estate enterprises of various ownerships.

The conference highlighted that high-quality development is the primary objective in building a modern socialist country in an all-round way. To achieve this, the financial industry must provide high-quality services for economic and social development. The meeting emphasized the importance of directing financial resources towards technological innovation, advanced manufacturing, green development, and small- and medium-sized enterprises. Additionally, efforts to promote high-level financial opening-up were encouraged, including expanding institutional opening-up, improving cross-border investment and financing facilitation, and attracting foreign financial institutions and long-term capital to conduct business in China.

The conference also stressed the significance of ensuring national financial and economic security and preventing risk transmission across regions, markets, and borders. This reflects concerns about growing financial risks overseas, particularly in the United States, where aggressive monetary policies and political governance challenges pose threats to global markets.

Contrary to claims of “foreign capital flight,” China has continuously opened up its financial market and remains an attractive destination for global capital. According to China Media Group, foreign banks’ total assets in China increased by 16.91 percent between the end of 2017 and the end of the third quarter of 2023, while foreign insurance companies experienced a staggering 126 percent growth in assets.