Shanghai Finance

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Lujiazui Forum opens, sending messages of tightening financial inspection

June 15,2016

   
 

Regulators and experts join the city’s two-day flagship financial forum today in Shanghai. --Wang Rongjiang

 

Regulators and experts joined the city’s two-day flagship financial forum today in Shanghai, sending messages of tightening inspection over financial innovation and rules-breaking attempts amid global economic growth stagnation and the country’s deepening financial reform.

Four top-level officials, including chairman of the nation’s top insurance regulator Xiang Junbo, addressed the morning session of Lujiazui Forum, focusing on China’s approach of developing a more reasonable financial market under supply-side reform.

“China has established a relatively complicated financial system with diversified products,” Zhang Tao, deputy governor of People’s Bank of China, told the forum. “But the general level of our financial service still has large room to improve, as we should face and solve the structural weakness shown by some specific sectors.”

Zhang discussed about financial macro prudential management mechanism in cooperation with government’s plan of leveraging down and capacity elimination, and highlighted the necessity of bring in financial innovations such as peer-to-peer lending and equity crowd funding into the mechanism.

“New financial technologies brought explosive development in China’s Internet financial sector, providing services for broader investors,” Zhang said. “Financial innovation itself is affirmative, but at the same time, we should not overlook risks behind, which call for further regulation and management to catch up with the pace of sector’s development.”

Zhang’s view coincided with China’s booming private lending sector amid difficulties of small and mid-capital enterprises to raise funds. Numbers of online lending platforms sprung up to more than 2,000 in less than three years with a third of them shut down due to financial frauds and operational failures, industry data showed.

Zhang also emphasized the importance of market discipline, as he pointed out the placing of “an orderly exist mechanism for failed or risky financial institutions”, allowing reconstruction and bankruptcy to happen.

The attitude towards tightening rules over financial market behaviors was echoed by Jiang Yang, vice chairman of China Securities Regulatory Commission, at the forum. Jiang pointed out recent risks over assets mergers and acquisitions.

“What we should focus at present, is a solid capital market foundation composed by listed companies,” Jiang said. “Market shouldn’t allow sensational hype that push forward acquisitions. We will look closely on the spillover risks brought by certain financial products and stick to our bottom line in preventing systematic risks.”

While Guo Ligen, vice chairman of China Banking Securities Commission, eyed more on current distort trends in inclusive finance and called for value-added ideas on sustainable business models instead of simple donation or small capital loans.

The annual event started in 2008 is co-chaired by Shanghai municipal government and the four central financial regulators as a high-end discussion about recent moves of country’s financial opening-up. Country’s first insurance exchange was launched on the forum today.