The former mayor of the central Chinese urban hub of Chongqing has highlighted five issues for the development of China’s financial sector in future.
Speaking at Tsinghua PBCSF Chief Economists Forum on 14 May, Huang Qifan (黄奇帆), currently specialist professor at Fudan University, said that the next stage of financial reform would involve “stimulating the critical tinder of innovation as well as expanding opening in key areas.”
Huang pointed to five areas of critical importance in particular including:
- The establishment of a renminbi anchor when appropriate. “For renminbi issuance to be anchored to the US dollar is not an indefinite plan…only by having one’s own independent currency anchor, and one’s own Treasury yield curve, can it be possible to have true sovereign monetary policy. All domestic financial products will then have a benchmark for pricing.”
- Driving finance to better service the real economy. Huang said that in recent years the real-estate sector had “abducted” the Chinese economy with high housing prices, as well as large volumes of capital rushing into the sector via bank lending. “Now a significant number of problems have appeared, and we now need to consider what kind of financial system is needed to support the position that ‘houses are for occupation, not speculation.’”
- Developing green finance based on China’s national conditions. Huang said that coal power would remain an important adjunct to China’s efforts to achieve the carbon mitigation targets of peak carbon by 2030 and carbon neutrality by 2060.
- Accelerating the development of tech finance that focuses on small and medium-sized tech companies. While China has seen the emergence in recent years of angel investors and venture investors, Huang contends that many institutions continue to lack the ability to identify “unicorns” with advanced technologies and innovations. “In the preceding Internet era, we saw many such giants be heavily warehoused by foreign capital. This time around, will our domestic institutions be able to seize opportunities in cutting-edge areas such as the digital economy, the biotech economy and the green economy?”
- How finance can better service common prosperity. “We should create conditions to enable ordinary workers to have investment channels outside their regular salaried remuneration…[this will] create conditions for workers to enjoy the value-added benefits of capital, as well as deliver an unending stream of long-term funds to capital markets.”