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Controlling risk and deepening financial reforms will top the agenda of Chinese governments financial work in the years, as worry about a double-dip recession hangs over the global economy.
A series of development plans for the financial sector in the coming five years were laid out during the two-day National Financial Work Conference last week, which is held every five years since 1997.
"China's economy has maintained stable and relatively fast growth with stabilized consumer prices and improvements in people's lives. The financial system is running steadily. The good momentum of economic and social development remains unchanged," Premier Wen Jiabao said.
He pledged to allow market forces a greater say in deciding fund allocation and to more clearly define the government's role.
However, Wen also noted that global financial crisis still spread around the world. "We should strengthen our awareness of risks and responsibilities in order to push financial work to new levels," he added.
RISK PREVENTION AND CONTROL
On account of the slow growth of world economy and upheaval of international financial market, the systemic financial risk became one of the chief topics at the conference.
"Risk-aversion should be the lifeline of our financial work," Wen emphasized, adding that the development of financial innovation should not escape supervision.
Financial oversight will be tightened and improved, and banks should establish a more complete and prudent supervision system, he said.
Wen noted that China will further open up its financial sector to the outside world in an "independent, gradual, safe and win-win" way to ensure the country's economic and financial security.
To the financial institutions, avoiding risk means that they should learn lessons from debt crisis in the western countries and not overdevelop the derivatives, said Zhao Qingming, a finance expert with China Construction Bank.
To keep risk factors under control, Cao Yuanzheng, chief economist with the Bank of China, suggested that commercial banks should offer more security products and spread the risk through transactions in capital markets.
"It will require more regulation of commercial banks' financial products and controlling the amount of assets to curb the expansion of off-balance-sheet assets," Cao said.
TO CONTINUE FINANCIAL REFORMS
The conference proposed to deepen financial reforms and carry forward convertibility of yuan under capital accounts safely, which means that reforms remain the main point of financial work in the future.
Wen voiced his support for the development of financial innovation, also calling a train of financial reforms completed in the past years as "historical milestones."
Wen said China's large commercial banks have remarkably improved their capabilities of guarding against risks.
According to a statement released after the meeting, China's assets in the financial industry totaled 119 trillion yuan (18.8 trillion U.S. dollars) at the end of November 2011, a 149-percent increase from that at the end of 2006.
As of the end of September 2011, the banking capital adequacy ratio stood at 12.3 percent, 5 percentage points higher than that at the end of 2006, while the non-performing loan ratio was 0.9 percent, 6.2 percentage points lower than that at the end of 2006.
Currently, China has signed bilateral currency swap agreements worth more than 1.3 trillion yuan with 14 countries or regions, with 2.6 trillion yuan of cross-border trade being settled in yuan. |
