Shang Fulin, director of the Committee of Economy of the CPPCC National Committee and former chairman of the China Securities Regulatory Commission, said in a written interview with reporters from China Securities Journal and other media recently that ensuring the authenticity of issuers’ information disclosure is a key link in the reform of the registration system, which requires joint efforts of all parties.
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Strictly punish information fraud and other trust-breaking behaviors
Shang Fulin said the reform of the registration system is a major measure of the basic system reform of China’s capital market and an important starting point to promote the overall credit level of the capital market. As we all know, the capital market is built on the basis of commercial credit, which especially needs the honesty and trustworthiness of the participants. The basic connotation of the reform of the registration system is to properly handle the relationship between the government and the market, leave the market the right to choose, and minimize unnecessary administrative interference. This requires that the reform must adhere to the information disclosure as the core, enhance the transparency of the market, adhere to the “three public” principle, especially to emphasize the true, accurate and complete disclosure of information.
“Only by truly disclosing information can investors make value judgments and investment choices based on the real situation of issuers and their own risk preferences, and can the market effectively play a decisive role in resource allocation. “Ensuring the authenticity of issuers’ information disclosure is a key link in the reform of the registration system, which requires joint efforts of all parties.” Shang Fulin said that first, the issuer is the first person responsible for information disclosure, to improve the pertinence, effectiveness and readability of information disclosure. Second, it is necessary to strengthen the responsibility of verification and verification of intermediary institutions and professional inspection. Third, we should cultivate qualified investors so that they can independently judge the value of investment and make investment decisions. Fourth, the exchange and regulatory departments to do a good job in the examination and registration, control the entrance gate. At the same time, through the establishment and improvement of relevant rules and regulations and strict implementation, in order to ensure the authenticity of information disclosure, truly do not make false accounts. In accordance with the law and regulations, we will increase the severity and severity of punishments for acts of breach of trust, such as information fraud, so as to continuously consolidate the credit foundation and promote the stable and healthy development of China’s capital market.
Asset management industry rectification progress in line with expectations
On the new regulations and the rectification of the management business, Shang Fulin said that the introduction of the new regulations is of great significance to standardize the development of the management industry. At present, the rectification progress is in line with expectations and has achieved phased results. The transformation to net worth has been intensified, and the scale of interbank financing, non-compliant short-term products, and nested investments have all been significantly reduced, creating policy space and room for maneuver in response to various complex situations.
‘This year, relevant banks should make good use of the transitional period, earnestly assume the main responsibility for the rectification, and establish mechanisms and unified management,’ Mr. Shang said. We will formulate comprehensive rectification plans, strictly lock down the base number, take measures in accordance with the law and regulations, and complete rectification tasks in a prudent and orderly manner. It should also be noted that the transition period of the new capital management regulations is an opportunity for various market participants to improve their product research and active management capabilities.
“In the past, rigid payment and disorderly competition made product pricing difficult to reflect an institution’s management ability. With the standardization of the capital management industry, the core competitiveness of institutions will eventually be reflected in product development and the ability to actively manage risks. Information institutions should play in the management mechanism, the management idea, the incentive constraints mechanism, investment operation and talent reserves professional characteristics and comparative advantages, active learning and absorption of advanced international information industry mature investment ideas, business strategy, incentive mechanism and compliance risk control system, and improve their own competitiveness, promote the healthy development of the information technology industry.” Shang Fulin emphasized.
We will strictly prevent credit risks in key areas such as real estate
In Shang Fulin’s view, risk prevention is the eternal theme of the financial industry, but also the eternal theme of financial supervision. At present, the foundation for China’s economic recovery is still not solid, and there are still many uncertainties in the changing epidemic situation and the external environment. Credit risks are lagging behind to some extent, and we must not slacken our efforts to prevent and defuse financial risks. We must coordinate efforts to defuse both stock risks and incremental risks.
Specifically, Shang Fulin pointed out that the first is to keep the macro leverage ratio basically stable. We will strictly prevent credit risks in key areas such as real estate. We will move faster to deal with high-risk institutions. Expand efforts to crack down on illegal finance and “driving without a license”. We will guard against the impact of imported risks and ensure financial security. Second, we will intensify efforts to deal with bad products. We will improve the ability of risk prediction, explore innovative disposal methods, improve disposal efficiency, and be ready to deal with the rebound of non-performing loans. Third, we will vigorously regulate and regulate key businesses. We will consolidate our achievements in remedying market turmoil in the financial sector. We will continue to reduce the size of shadow banks and transform capital management in an orderly way. We will resolutely curb monopoly and unfair competition and prevent the disorderly expansion and wild growth of capital in the financial sector. Fourth, we will further improve the overall performance of financial services. We will continue to deepen supply-side structural reform in the financial sector and improve corporate governance and internal control and management. We should make adequate provision for loan losses, increase profit retention, expand channels for capital replenishment, strengthen our ability to resist risks, and lay a solid foundation for preventing and defusing financial risks.
Strictly crack down on “false innovation” and “chaotic innovation”
On financial technology and financial innovation, Shang Fulin said that the speed of financial innovation is inseparable from the construction of information technology and the improvement of scientific and technological level. The innovative application of information technology always accompanies the process of financial reform and development. Financial institutions themselves to use information technology to carry out the innovation, the implementation of digital transformation significantly speed up the pace, in payment clearing, credit financing, wealth management, application areas such as infrastructure development, to expand coverage for financial services, fill the blank of the service, improve the financial service efficiency, lower the difficulty of financing, improve the level of risk prevention and control has made certain contribution, some application fields have been in the international leading level.
“At the same time, the rapid development of financial digitalization has brought new problems such as cyber security, market monopoly, unclear ownership of data, protection of consumers’ rights and interests, as well as some ‘fake innovations’ and even illegal behaviors, affecting market fairness and financial stability.” To this end, financial authorities have taken decisive measures, Shang said.
Shang Fulin said that the “14th Five-Year” period, the overall direction of financial innovation development is clear. We must adhere to the essential requirement of serving the real economy and the people. We will enable science and technology to play a bigger role in building a new pattern of development in services. At the same time, we will enable more innovation outcomes to serve the people’s production and life, and protect the legitimate rights and interests of financial consumers.
He stressed that to follow the basic laws of finance, financial innovation must be carried out under the premise of prudent supervision. Fintech is in essence a technology-driven financial innovation activity, which should also be regulated and licensed in accordance with laws and regulations. We will severely crack down on “fake innovation” and “random innovation” and have zero tolerance for all kinds of violations of laws and regulations. We will continue to improve the regulatory system to make it more targeted, applicable and operable. Adapting to the development trend of financial digital transformation and combining with national conditions, we should properly handle the relationship among financial development, financial stability and financial security, create a fair market environment for competition, break up monopoly and prevent the disorderly expansion of capital.
Financial sector opening up
New steps will be taken in opening up based on rules and institutions
Shang Fulin said opening up to the outside world is China’s basic state policy. As an important part of opening to the outside world, the pace of opening to the outside world of the financial industry is always in line with the development stage of the socialist market economy. Up to now, the revision and formulation of laws and regulations related to the opening-up measures have been basically completed, and a number of landmark foreign-funded projects have been implemented, including the first foreign-controlled wealth management company and foreign-owned life insurance subsidiary.
“As China opens to the outside world, there are more risks and challenges in opening up.” Shang Fulin said that the world is undergoing profound changes unseen in a century and the world economic and political landscape is undergoing profound adjustment. Short-term shocks will not affect the overall process of financial opening-up. As one of the important engines driving the world economy and one of the most important financial markets in the world, China’s opening-up will continue to attract more and more people, and financial opening-up will face new opportunities.
To be specific, Shang Fulin believes that, first, under the background of the global economic recession and the super-conventional loose monetary policies generally adopted by central banks around the world, China’s economy is the first to recover, and the attraction of RMB assets continues to increase. Second, it has a large scale market and huge investment potential. Third, as the economy shifts to innovation-driven growth, market players will enjoy broad prospects for innovation, which will bring more high-quality targets to the financial market. Fourth, the business environment continues to improve, and our voice in the international market continues to grow.
Shang Fulin stressed that during the 14th Five-Year Plan period, it can be predicted that the financial industry will take new steps in the opening up of rules and institutions. In terms of key tasks, first, we need to create an institutional environment that is compatible with high-level opening-up and encourage Chinese and foreign financial institutions to compete on an equal footing, deepen cooperation, learn from each other and promote innovation. Second, we will continue to enhance the international competitiveness of the financial system and financial institutions in the course of further opening-up. Third, we need to improve our capacity for macro financial management and risk prevention and control in an open environment, align ourselves with international best practices, and provide more support for the high-quality development of the financial sector.
We will continue to deepen supply-side structural reform in the financial sector
On the “Fourteenth Five-Year” financial industry development, Shang Fulin said that this year is the “Fourteenth Five-Year” plan to start the year. Financial industry should take the initiative to deal with internal and external environment of the profound and complicated changes, adapt to the new characteristics of the new characteristics of domestic economic and social environment, particularly in the better meet the needs of innovation driven development and population structure change and improve people’s quality of life demand, the increase of resources and environment constraints, the practice of green development and social responsibility, etc. At the same time, we must properly handle new contradictions and challenges facing the international environment and make a good start for building a modern socialist country in all respects.
Shang fulin argues that financial development in China, service build new development pattern, and always adhering to the party’s overall leadership for the financial work, establish people’s position, giving full play to the advantages of system, to serve the real economy as direction, promote the development of national economy and promote the well-being of the people’s livelihood, realize the benign interaction with the real economy.
To implement specific tasks, Shang Fulin pointed out that continue to deepen the financial supply side structural reform. In essence, building a new pattern of development is a matter of reform. We will optimize the structure of the financial system and improve the financing structure. We will strengthen the basic institutions of the capital market, accelerate the improvement of the multi-tiered capital market system, and increase the proportion of direct financing. We will deepen reform of small and medium-sized banks, focus on strengthening corporate governance, and strengthen oversight of shareholders’ equity and related transactions. We will develop the third pillar of old-age insurance in a standardized way to strengthen weak links in old-age security.
We will improve the financial service system in key areas and weak links. We will implement the new development philosophy and vigorously develop inclusive finance and green finance. We will consolidate and expand our achievements in poverty alleviation, promote the development of small and micro private enterprises, and support green economic recovery and transformation.
We will open the financial sector to the outside world on a wider scale, in a wider range of areas and at a deeper level. The great domestic circulation is the foundation of the domestic and international double circulation, and the international market is the extension of the domestic market. We should fully tap the potential of the super-large market and domestic demand, pursue open development, form a systematic and institutionalized pattern of financial opening, and enhance the international competitiveness of market entities.
In addition, the financial supervision system should be improved, supervision coordination should be strengthened, and synergy should be formed. We will coordinate financial development with financial security, in particular, defuse existing risks and prevent incremental risks in the wake of the epidemic, and safeguard the bottom line of financial risks.