China to deepen financial reforms, maintain stability of yuan: CPC

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Last updated at: (Beijing Time) Wednesday, October 22, 2003

China to deepen financial reforms, maintain stability of yuan: CPC

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China will deepen its financial reforms, tighten supervision over the financial market and maintain the stability of Renminbi yuan, according to a decision published by the Communist Party of China (CPC) Central Committee on Tuesday.

"We shall perfect the mechanism for forming the exchange rate of yuan and maintain a general stability of yuan at a reasonable and balanced level," said the decision regarding the improvement of China's socialist market economic system, which was made at the third plenum of the 16th CPC Central Committee convened in Beijing last week.

China will also strive to introduce a mechanism under which the interest rate is decided according to the market supply and demand and the central bank only attempts to influence the rate changes through its monetary policies, said the decision.

The decision said that all commercial banks and securities, insurance and trust investment companies in the country must undergo further reforms to become modern financial enterprises with ample capital, tight internal management, safe operation, excellent service and good economic returns.

"We shall promote the shareholding reforms in some qualified state-owned commercial banks, which shall step up efforts in handling bad assets and increasing capital funds to create conditions for being listed on the stock market," it said.

Investors should be encouraged to participate in the restructuring of small and medium-sized financial institutions, while financial enterprises of different ownerships should be developed steadily under the precondition of tightened supervision and secured capital funds, it added.

To protect the legitimate rights and interests of the money depositors, investors and insurance buyers, the financial supervision system must be further improved to ensure an open, fair and orderly market competition and effectively prevent and evade financial risks, said the document.

"We must tighten up financial supervision, prevent and crack down on financial crimes, and subject financial operations to social supervision," it said.

The decision also said that the country will take steps to reform its taxation system according to the principle of "a more simplified taxation system, broader tax collection basis, lower tax rates and stricter tax collection".

"The system of tax rebates for exporters will be reformed, while taxation on various kinds of enterprises will be unified," it said.

The value-added taxes will become consumption-oriented instead of the current production-oriented, while the collection of personal income taxes will also be improved, it added.

Conditions should be created to gradually introduce a unified taxation system in both urban and rural areas, said the document.

The decision also stresses the importance of reforming the current system of government fiscal management, especially the need to increase transparency in government expenditures.

All government expenditures should be clearly listed in the budget, while people's congresses at all levels, or the legislative bodies, should tighten their examination of and supervision of the government budgets, it said.

Meanwhile, the country's central and western regions, as well as areas with a concentration of ethnic minorities, will enjoy greater financial support from the central government under the transfer payment system, said the decision.

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