Financial Powerhouses & Key Points in China's Financial Reform and Development

Dec 11-2025   

*This article is based on a speech by Zhang Jianhua, Director of the Center for Financial Development and Regulatory Technology at Tsinghua University's PBC School of Finance. He currently serves as a Counsellor to the People's Bank of China, formerly held the positions of Director of the PBOC Research Bureau and President of Huaxia Bank, and is the author of Financial Powerhouses.

The Historical Evolution of Global Financial Powers

Throughout history, three nations have been widely recognized as successive global financial powers: the Netherlands, which rose through international trade from the late 16th to the first half of the 18th century; Great Britain, which ascended via colonial expansion and the Industrial Revolution from the late 17th to the early 20th century; and the United States, which has maintained financial power since the 20th century, bolstered by its role in World War II and its military and technological strength. In summary, the hallmarks of a financial powerhouse are, first, the internationalization of its currency and, second, the presence of global financial centers. These centers exhibit strong agglomeration effects, with concentrated trade and financial transactions, major trading platforms, and the ability to shape market rules.

Reflecting on the development of historical financial powers, we can identify four key insights: 1. Domestic economic growth forms the foundation of financial power. 2. Innovation acts as its catalyst. 3. Openness is an essential pathway. 4. Sound risk monitoring and effective regulation are indispensable for healthy development.

Eight Essential Characteristics of a Financial Powerhouse 

We have identified the following eight essential characteristics of a financial powerhouse: First, a robust economic foundation. Second, a strong sovereign currency and central bank. Third, a comprehensive legal and regulatory framework. Fourth, a well-developed financial market system. Fifth, the capacity to efficiently serve the real economy. Sixth, a stable financial development environment. Seventh, autonomous financial control capabilities. Eighth, a prominent international financial standing.

Building & Developing a Modern Financial System 

In constructing a modern financial system, establishing robust capital markets is of paramount importance. While China's capital markets have made progress, their development has lagged behind the expansion of the broader financial system. Therefore, capital markets must be vigorously developed. This entails several specific measures: First, enhancing the inclusiveness and adaptability of capital markets. Second, cultivating patient capital and improving the market ecosystem to encourage long-term investment—an area where China currently faces challenges. Third, advancing the opening-up of capital markets to a greater depth and higher standard. Fourth, fostering a sound market environment, nurturing high-quality listed companies, and strengthening the rule of law in capital markets.

Financial Autonomy & Financial Power Status 

The development of financial autonomy encompasses four main dimensions: First, promoting the internationalization of the RMB prudently while safeguarding monetary sovereignty and stability. Second, maintaining independence and autonomy in monetary policy while advancing RMB internationalization. Third, tailoring monetary policy to national conditions to ensure it is flexible, appropriate, targeted, and effective, and establishing a scientific and robust monetary policy framework that fully leverages the guiding role of monetary and credit policies while maintaining equilibrium in domestic and external interest and exchange rates. Fourth, ensuring a stable and effective financial regulatory system with the capacity for self-renewal and improvement, so as to build a financial regulatory framework with Chinese characteristics. Additionally, technological independence must be strengthened through research, development, and innovation to achieve self-reliance and control over financial infrastructure.

The Path to Becoming a Financial Powerhouse 

Significant gaps remain between China and established financial powerhouses. Nevertheless, China possesses numerous favorable conditions on its journey toward financial power. First, China's economy continues to grow, with its total output firmly ranking second in the world. Second, China's policy environment continues to improve, providing institutional safeguards to support financial sector development. Third, rapid scientific and technological advancements in China are driving transformative momentum within the financial sector. Fourth, China's growing involvement in international financial cooperation has earned it considerable external prestige and advantages.

In the long term, it is highly probable that China will surpass the United States in economic scale, though achieving financial superiority over the U.S. will require a longer timeframe. We remain steadfast on this journey. As long as we maintain strategic resolve and persevere in the long term, we will ultimately achieve our goals.