Xi Jinping, general secretary of the Communist Party of China Central Committee, underscored that China should deepen supply-side structural reform in the financial sector and strengthen the sector's ability to serve the real economy.
The country should keep a fine balance between maintaining growth and forestalling risks, and deal with risks in key areas in a targeted and effective manner, he said, adding that China should deepen opening-up of the financial sector.
Xi, also president, pointed out that finance is a core aspect of a country's competitiveness, financial security is an important part of national security, and the financial system is a major fundamental system in the process of economic and social development.
Xi made the remarks when presiding over a group study session of the CPC Central Committee Political Bureau on Friday.
Liu Chunsheng, an associate professor at Beijing-based Central University of Finance and Economics, said China's financial system has great potential in helping stabilize the economy.
"Through deepening financial reform and opening-up, financial intermediaries could strengthen their role in transforming supportive monetary policies into growth of the private economy," Liu said.
To accommodate the financing needs of private and small enterprises with rather high operating risks, supply-side reforms to enhance the financial system's efficiency in asset pricing and risk management are imperative, Liu said.
"Deepening opening-up of the financial sector can help, as such efficiency will improve with increased competition and diversified supply of financial resources," Liu added.
The country should push for high-quality development of the sector with a focus on improving financial services and forestalling financial risks, Xi said.
Xi urged enhancing the global competitiveness of China's financial sector, elevating two-way opening-up to a higher level, and beefing up capabilities of financial management, and risk prevention and control amid greater opening-up.
China's financial sector opening-up has sped up.
In 2018, the country removed foreign ownership caps of banks and financial asset management firms. Foreign capital was also allowed to have majority ownership of securities firms, fund managers and futures companies.
Reforms including revamps of the market access system and trading regulations should be deepened, and regulators should take a two-pronged approach to enforcing both prudential management at the macro-economic level and supervision over activities at the market level, Xi said.
Efforts should be made to address the current situation where the costs of legal and regulatory breaches in the financial sector, especially in capital markets, are too low, Xi said.
Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, said mainland-listed firms violating related regulations now generally only face administrative punishment, and the system for investors to protect their rights should be refined.
"China's capital markets are undergoing the reform of minimizing administrative controls and strengthening crackdowns on illegal market behavior."
This reform, Dong added, is fundamental for revamping the stock and bond markets that could offer the ultimate solution to financing difficulties faced by the private sector.
An all-around and multilevel financial services system including venture capital, bank loans and stock and bond markets will be put in place, Xi said.
He called on the country to go along with the general development trend of relying more on innovation and creativity to foster a change in the structure and quality of financial services.
A multilevel banking system with wide coverage and diverse expertise should be established, while personalized and differentiated financial products that suit market demand should be developed, he said.
"Risk prevention must be done in a way that can push ahead high-quality economic development," he said.
Xie Duo, Party secretary and chairman of Silk Road Fund Co Ltd, spoke on the issue and made suggestions.
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