China to Focus Financial Policy on Supporting Real Economy and Opening Up Financial Services Industry
Navigating the Future of Finance: China’s Financial Regulatory Policy for 2024 and Beyond
At the 17th Asian Financial Forum held in Hong Kong in 2024, Li Yunze, head of the National Financial Regulatory Administration (NFRA), unveiled China’s financial regulatory roadmap for the upcoming years. This policy underscores a commitment to supporting the real economy, further liberalizing the country’s financial services sector, and propelling high-quality financial development.
Key Pillars of the Financial Regulatory Policy
1. Focus on Supporting the Real Economy: Financial institutions will be encouraged to adapt their services to cater to the real economy’s needs, thereby stabilizing the national economy. This includes extending financial assistance to key industries, small and medium-sized enterprises (SMEs), and infrastructure projects.
2. Targeted Support for Specific Segments: The policy prioritizes specific segments of the financial industry, including technology finance, green finance, inclusive finance, and digital finance. This focus aims to drive innovation, promote sustainable development, and guarantee that financial services are accessible to all segments of the population.
3. Strengthening Financial Supervision: The NFRA will implement comprehensive supervision across five major areas: institution, behavior, function, penetration, and continuous supervision. This move aims to enhance the effectiveness and efficiency of financial regulation, promoting the stability and resilience of the financial system.
4. Promoting High-Quality Financial Development: The policy strives to foster high-quality financial development by improving the foresight, accuracy, effectiveness, and synergy of supervision. This will support the long-term growth and stability of the Chinese economy, contributing to global economic development.
Hong Kong’s Role in China’s Financial Development
Hong Kong Chief Executive John Lee Ka-chiu emphasized the significance of the “one country, two systems” principle in enabling Hong Kong’s financial sector to thrive despite challenges. He highlighted Hong Kong’s role in creating opportunities for companies and economies across Asia and worldwide.
Financial Market Connectivity and Cross-Border Capital Facilitation
The People’s Bank of China (PBOC) and the Hong Kong Monetary Authority (HKMA) have introduced six measures to strengthen financial market connectivity and facilitate cross-border capital flows. These measures encompass:
1. Allowing bonds under Bond Connect as eligible collateral for the renminbi liquidity arrangement of the HKMA.
2. Further opening-up to allow foreign investors to participate in domestic bond repurchase business.
3. Expanding and facilitating individual investment channels in the Guangdong-Hong Kong-Macao Greater Bay Area.
4. Implementing policies to facilitate payments for home purchases by Hong Kong and Macao residents in the GBA.
5. Expanding the scope of pilot projects for cross-border credit reporting cooperation between Shenzhen in Guangdong province and Hong Kong.
6. Deepening the cross-border pilot program of the digital renminbi to provide greater convenience for Hong Kong and mainland residents and enterprises.
Conclusion: Embracing a New Era of Financial Development
China’s financial regulatory policy for 2024 and beyond sets the stage for a future focused on supporting the real economy, further opening up the financial services industry, and promoting high-quality financial development. Hong Kong’s role as a financial center and its collaboration with mainland China will continue to be crucial in driving economic growth and stability in the region. The measures to enhance financial market connectivity and facilitate cross-border capital flows will further strengthen the financial linkages between Hong Kong and mainland China.