Officials vow greater financial support for stable economic growth

Chinese Financial Authorities Pledge Greater Support for Stable Economic Operations and High-Quality Development

A bilingual sign for the Annual Conference of Financial Street Forum 2024 is displayed on Beijing Financial Street on October 18, 2024. Photo: Courtesy of Financial Street Forum

Chinese financial authorities on Friday vowed greater financial support for stable economic operations and high-quality development, including an indication of a reserve requirement ratio (RRR) cut by the end of 2024. 

Reserve Requirement Ratio Cut Planned

The People’s Bank of China (PBC), the country’s central bank, is considering a cut of 0.25 to 0.5 percentage points in RRR at an appropriate time before the end of 2024, depending on market liquidity situations, Pan Gongsheng, governor of the PBC, said at the Annual Conference of Financial Street Forum 2024 in Beijing on Friday.

The central bank launched the Securities, Funds and Insurance companies Swap Facility on Friday, with the first batch of the application quota exceeding 200 billion yuan ($28.1 billion). Additionally, a special re-lending facility was established to guide banks to provide loans to listed companies and their major shareholders for buybacks and increasing shareholdings.

China has recently introduced a package of financial measures to support the economy, and these policy moves have received positive feedback from both home and abroad, according to Pan. He added that these policies have bolstered social confidence and contributed to the stable operation of the economy and financial markets.

Emphasis on Sustainable Development Goals (SDGs)

“Currently, the Chinese economy is stable and making progress. The shift from old growth dynamics to new ones continues while high-quality development is making steady progress. The favorable conditions of a huge market, strong resilience, great potential and strong vitality remain unchanged,” Li Yunze, head of the National Financial Regulatory Administration (NFRA), said at the same forum.

Li said the NFRA will step up efforts to encourage financial institutions expand financial supply, optimize resource allocation and accelerate smooth circulation of capital in an all-out effort to boost economic recovery and growth.

The officials’ remarks drew positive responses. “Stimulus policy measures such as RRR cut will release liquidity and reduce enterprises’ financing costs, and as a result, boost the development of the real economy,” said Xi Junyang, a professor at the Shanghai University of Finance and Economics.

The expert said that lowering the RRR can guide financial institutions to increase their support for the real economy and boost market confidence in an improved manner.

Continuous Opening-Up of China’s Financial Sector

The NFRA has greenlit BNP Paribas and Volkswagen Financial Services to jointly set up a property insurance company in Beijing. Prudential Financial has also received approval to establish an insurance asset management firm in Beijing, Li said.

These mark some of the latest steps in China’s high-level opening-up of the country’s financial sector, analysts said.  

“Opening-up is a defining feature of Chinese modernization and an important driving force behind the reform and development of China’s financial industry,” Li said.

China has been a popular destination for global investment and its doors will continue to open wider, the official stressed.

“With higher standards, greater strength and more forceful measures, we strive to build a market-oriented, rule-of-law-based and internationalized business environment, and continuously promote high-level opening-up of the financial sector,” Li said.

China has implemented over 50 financial opening up measures in recent years, including eliminating foreign ownership limitations in the banking and insurance sectors and lowering access criteria for foreign investors.

China has seen 24 foreign systemically important banks establish branches in the country, and nearly half of the world’s top 40 insurance companies have entered the Chinese market.

Wu Qing, chairman of the China Securities Regulatory Commission (CSRC), said at the same forum that the CSRC will firmly boost comprehensive institutional opening-up in the market, institutions and products, deepen the connectivity between domestic and overseas markets, expand enterprises’ listing overseas and encourage more foreign institutions to carry out business in China.

In recent months, more foreign institutional investors have accelerated their investments in the Chinese capital market, as China maintains its steady economic growth momentum.

In September, M&G Investments, one of Europe’s leading asset managers headquartered in London, announced the launch of the M&G China Fund, aiming to provide investors with access to what it called “one of the world’s most compelling markets for long-term stock picking.”

With China’s steady economic growth, the country remains a popular destination for foreign investment, especially in technology innovation, energy transition, pharmaceuticals and consumer goods, Ginger Cheng, CEO of DBS China, told the Global Times.

SDGs, Targets, and Indicators

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 8: Decent Work and Economic Growth
• SDG 9: Industry, Innovation, and Infrastructure
• SDG 17: Partnerships for the Goals

2. What specific targets under those SDGs can be identified based on the article’s content?

• SDG 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 percent gross domestic product growth per annum in the least developed countries
• SDG 8.3: Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity, and innovation
• SDG 9.3: Increase the access of small-scale industrial and other enterprises, particularly in developing countries, to financial services, including affordable credit, and their integration into value chains and markets
• SDG 17.3: Mobilize additional financial resources for developing countries from multiple sources

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Gross domestic product (GDP) growth rate
• Access to financial services for small-scale enterprises
• Amount of financial support provided by financial institutions
• Foreign investment in the Chinese market

SDGs, Targets, and Indicators

Source: globaltimes.cn