Major goals for financial system outlined

The 12th Lujiazui Forum 2020 opened on Thursday in Shanghai and will last for two days. The theme of the event is “Shanghai International Financial Center 2020: New Starting Point, New Mission, New Vision.”

Government officials, regulators, financial leaders, as well as renowned economists and scholars from around the world attended the forum and discussed key topics in finance and the global economy. The aim of the event is to offer inspiring ideas and suggestions for the sustainable growth of the world economy.

China's Vice Premier Liu He delivered a written speech at the opening ceremony of the 12th Lujiazui Forum 2020 on Thursday, clarifying the five major tasks that the financial system should carry out.

Liu said that in the face of the COVID-19 outbreak, the country has made great achievements in coordinating the prevention and control of the epidemic and in resuming work and production, and marginal improvements have been made in various economic indicators.

In May, the value-added industrial output of enterprises above designated scale increased by 4.4 percent year on year, with manufacturing industry up 5.2 percent. Fixed asset investment rose 5.87 percent month on month, some consumer and retail sales indicators showed positive changes, and both the automobile and property markets are picking up.

"We are still facing great downward pressure on the economy, but the situation is gradually changing for the better. A new pattern of double-cycle development, with domestic circulation as the main one and mutual promotion at the international and domestic levels, is taking shape," Liu said.

"The once-in-a-blue-moon epidemic has made us aware that greater attention should be paid to seeing human life and health as the center in promoting national economic and social development and scientific and technological innovation. We should also attach importance to the harmony between nature and humanity, the global cooperation and protection of the integrity and stability of industrial chains, as well as the long-term sustainable development of economy and society," he said.

Liu noted that China is now in an important period of completing the 13th five-year plan and drawing up the grand blueprint for the 14th five-year plan. The national Two Sessions have been successfully concluded and work for the year has been deployed.

One task of the financial system is to make the prudent monetary policy more flexible and appropriate, strengthening counter-cyclical regulation, adhering to an appropriate aggregate policy, maintaining reasonable and ample liquidity, promoting a virtuous circle between the financial sector and the real economy, and giving full support to the work of ensuring stability on six fronts and security in six areas.

The country's financial system will also make efforts to better serve the real economy and promote economic transformation and upgrading. Supply-side structural reform should be deepened, and efforts should be made to break through the blocking points of currency transmission, innovate financial products, optimize financial structure, and increase the proportion of small and micro enterprises getting corporate loans, credit loans and manufacturing loans.

Meanwhile, the country will accelerate the development of the capital market, optimizing the systems of information disclosure, issuance and delisting, and enhancing the convenience of transactions, market liquidity and vibrancy.

The supervision of market intermediaries will be strengthened, and authorities will substantially intensify efforts to crack down on financial frauds and other illegal acts. Also of note, the implementation of the securities class action mechanism will be accelerated to better protect the interests of investors.

Liu also highlighted the importance of improving risk prediction and control, as well as further deepening the reform and opening up.

Yi Huiman, chairman of the China Securities Regulatory Commission, delivered a keynote speech, sharing his views on the domestic and international economic and financial situation under the influence of COVID-19 pandemic.

Global trade, investment and consumption all fell significantly, supply chains and industrial chains also encountered obstructions, while both sides of supply and demand suffered setbacks. 

In the face of such difficulties, Yi said, the financial sector must take the initiative to better perform its important functions of promoting the global allocation of factor resources, facilitating cross-border investment and financing activities, and supporting scientific and technological innovation in industries.

"Although the epidemic has struck a heavy blow to human society and the process of economic globalization, in general, we still believe that the internal logic of international division of labor and the market rules have not fundamentally changed," Yi said. "The problems encountered in the globalization process can only be solved in the development of globalization.

"In the post-epidemic period, we should actively adapt to the changes in new situations, persist in meeting each other's needs, innovate the ways and means of solving problems, and jointly promote global financial cooperations and improve the prevention and control financial risks, so as to achieve new development from a new starting point.”

The commission will continue to strengthen extensive contacts with overseas financial regulatory authorities and international financial organizations, actively participate in international financial governance, work with other parties on establishing a law enforcement alliance to combat cross-border securities crimes, and jointly solve the problems in strengthening the audit supervision of global listed companies, to safeguard the legal rights and interests of investors all over the world.

These are also the new requirements and ideas in pushing forward the development of Shanghai as an international financial center, Yi said. 

Yi also said the capital market should take on the mission of promoting a higher level of openness. “Opening up is the basic feature of modern economic systems and mature financial markets, and is the only way to build an international financial center."

The commission will continue to uphold the concept of "opening up, cooperation and sharing,” accelerate the high-level two-way openness of the capital market, and continue to deepen connectivity of capital markets.

The Stock Connect schemes linking Shanghai and Shenzhen with overseas markets will be further improved with broadening the scope and subject of investment via Stock Connect projects.

The connectivity of Exchange Traded Funds will also be expanded, to boost the development of Shanghai as a financial center.

"We also warmly welcome investors from all countries to participate more extensively and deeply in the Chinese markets and invest in China, to achieve mutual benefit and win-win outcomes and at the same time promote the integrated development of global economy and finance," Yi said.

In terms of bolstering foreign-funded financial institutions, China will continue to encourage them to establish or hold shares of securities, funds and futures agencies, so as to create a fair and favorable market environment for foreign-funded institutions.

Local financial institutions will also be supported to make full use of Shanghai's advantages to develop into international first-class investment banks and wealth management institutions.

As for the next step of developing the STAR Market, Yi put forward three specific tasks — to accelerate the inclusion of STAR-listed stocks into the subject of Shanghai's Stock Connect schemes; to introduce the market maker system; and to study innovative mechanisms such as allowing the transfer of old IPO shares.

He also pledged to support the pilot projects of major capital market reforms and innovation measures to be launched in Shanghai first.