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Supply-Side Structural Reform of Finance

Jun 09-2019   



Three reasons were behind the government’s seemingly sudden push for the supply-side structural reform of finance, said Prof. Huang Yiping in the 2019 Jin Rong Jie Annual Summit organized by the Beijing People’s Municipal Government. They were: the decline in financial efficiency; the need to pre-empt systemic financial risks; and unmet financial needs especially of small and medium enterprises.

 

China’s per capita GDP was merely USD2,600 before the outbreak of financial crisis in 2007; In 2018, it had surged to close to USD10,000, making China a mid-high income nation. The gradual loss of cost advantages entailed that China should count on innovation to bolster industrial upgrading and boost economic growth. As private enterprises accounted for 70% of all innovations in China, they should be granted access to better financial services.

 

Therefore, the ultimate goal of the supply-side structural reform of finance should be to make the financial industry work for the real economy, meet the needs of social-economic development and of the people, and put in place a modern financial system.

 

Reforms could be undertaken in three areas: One, expand and develop multi-layered capital market; Two, strengthening market-based mechanism in resource allocation; And three, overhaul the supervisory framework with the main purpose of avoiding systemic risks. Fintech should be harnessed and utilized to make it easier for financial entities to get new clients and control risks, advised Prof. Huang, also Deputy Dean of NSD.

Supply-Side Structural Reform of Finance

Jun 09-2019   



Three reasons were behind the government’s seemingly sudden push for the supply-side structural reform of finance, said Prof. Huang Yiping in the 2019 Jin Rong Jie Annual Summit organized by the Beijing People’s Municipal Government. They were: the decline in financial efficiency; the need to pre-empt systemic financial risks; and unmet financial needs especially of small and medium enterprises.

 

China’s per capita GDP was merely USD2,600 before the outbreak of financial crisis in 2007; In 2018, it had surged to close to USD10,000, making China a mid-high income nation. The gradual loss of cost advantages entailed that China should count on innovation to bolster industrial upgrading and boost economic growth. As private enterprises accounted for 70% of all innovations in China, they should be granted access to better financial services.

 

Therefore, the ultimate goal of the supply-side structural reform of finance should be to make the financial industry work for the real economy, meet the needs of social-economic development and of the people, and put in place a modern financial system.

 

Reforms could be undertaken in three areas: One, expand and develop multi-layered capital market; Two, strengthening market-based mechanism in resource allocation; And three, overhaul the supervisory framework with the main purpose of avoiding systemic risks. Fintech should be harnessed and utilized to make it easier for financial entities to get new clients and control risks, advised Prof. Huang, also Deputy Dean of NSD.