Financial regulators eye high-quality development with major policy measures

Chinese financial regulators, including the China Securities Regulatory Commission (CSRC), People's Bank of China (PBC), and the National Financial Regulatory Administration (NFRA), announced significant policy measures and reforms for China's capital market and highlighted China's efforts in promoting high-quality opening-up in the financial sector at the 2024 Lujiazui Forum in Shanghai which started on Wednesday.

On the same day the International Monetary Fund (IMF) has announced the opening of a new IMF regional center in Shanghai. Recently the CSRC has approved BNP Paribas and HSBC to expand financial business scope in China, providing a vivid testimony of further opening-up of China's financial industry.

Foreign institutions attending the event told the Global Times that the forum showcased China's ongoing efforts to further open up its financial markets and strengthen its position as a key driver of global economic prosperity which will enhance its appeal as an investment destination.

Signal for opening-up

Under the theme of ''Promoting World Economic Growth With High-Quality Financial Development,'' the two-day forum has brought senior officials of financial regulatory departments, financial industry, and renowned experts and scholars from home and abroad to discuss how to promote high-quality financial development through reform and innovation in the financial sector, address the problems faced by the current global economy through high-quality financial development, and thereby promote sustained growth of the world economy.

At the opening ceremony, the IMF announced the opening of a new IMF regional center in Shanghai to strengthen the its engagement and partnership in the Asia-Pacific region.

"We welcome the establishment of the IMF regional center in Shanghai. We believe the Shanghai regional center will deepen cooperation between the IMF and China, enhance macroeconomic policy exchange and coordination among the Asia Pacific countries, and promote regional and global financial stability," PBC Governor Pan Gongsheng said.

Regarding the Shanghai center, the IMF Managing Director Kristalina Georgieva said: "The center will further strengthen the IMF's engagement in the dynamic Asia Pacific region, deepen our understanding of perspectives from member countries, and foster international economic cooperation."

The CSRC recently approved BNP Paribas (China) to act as a custodian for securities investment funds, and also approved HSBC Qianhai Securities to engage in margin trading. During the forum, Chinese financial authorities underscored efforts to further open up China's financial market and welcome foreign investments to operate in the country.

Wu Qing, head of the CSRC said it will support Shanghai in building a world-class international financial center, promote high-quality development of stock and bond markets, enhance futures and derivatives markets, cultivate top-tier investment banks and institutions, support more foreign financial institutions to operate in Shanghai and attract more medium and long-term capital.

Zhu Hexin, PBC deputy governor and head of the State Administration of Foreign Exchange, said at the forum that China will further facilitate overseas investors' participation in domestic securities investment, cross-border financing for technology companies and support multinational companies in Shanghai to establish global or regional fund management centers.

The Chinese financial authorities also announced major reforms of China's capital market.

The CSRC has unveiled eight new reforms measures for China's STAR market aimed at supporting technological innovation and the development of new quality productive forces. The announcement was made on the five-year anniversary of the launch of the Nasdaq-style sci-tech innovation board in Shanghai, a milestone in the country's capital market reform.

Pan from the PBC said at the forum that the central bank will continue to adhere to a supportive monetary policy stance, consolidate the positive trend of economic recovery, and create a favorable monetary and financial environment for economic and social development.

Li Yunze, director of the NFRA, said the agency will be releasing guidelines in the near future to support Shanghai to build itself into a global reinsurance center.

The signals from the forum clearly demonstrate that China's financial reform and opening-up are making significant progress, with regulatory authorities actively driving this process forward. This will boost the confidence of both domestic and foreign markets and investors in the growth of China's financial sector, Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Wednesday.

These proactive measures will elevate China's financial status, fostering closer and mutually beneficial connections between the global financial system and the Chinese market, and not only contribute to the enhancement of China's financial system, but also promote the healthy development of the global financial and monetary systems, professor Xi said.

Data shows that in 2023, the value added of Shanghai's financial industry reached 864.686 billion yuan ($119.15 billion), an increase of 5.2 percent year-on-year. In the first quarter of this year, the value added of Shanghai's financial industry reached 209.67 billion yuan, an increase of 5.1 percent year-on-year.

Attractiveness of Chinese market

The Lujiazui Forum has attracted a number of guests from overseas financial regulatory agencies and institutions.

Andrew S Komaroff, Chief Operating Officer of Neuberger Berman Group, told the Global Times on Wednesday that the Lujiazui Forum sends a strong signal that China is committed to driving high-quality growth and playing a constructive role in addressing global economic challenges.

"China's pursuit of high-quality development, characterized by a focus on sustainability, innovation, and inclusive growth, is crucial for the global economy. As the world's second-largest economy, China's continued openness and integration into the global financial system will be critical in fostering greater international cooperation and stability. China's commitment to further liberalizing its financial markets and promoting two-way capital flows aligns well with the interests of global investors like Neuberger Berman," Komaroff said.

China's large and rapidly evolving economy, coupled with its ongoing financial reforms and opening-up, presents a wealth of investment opportunities for global asset managers. The country's emphasis on innovation, particularly in sectors such as technology, healthcare, and renewable energy, makes it an attractive destination for long-term, high-quality investments. Additionally, China's efforts to strengthen corporate governance and investor protection standards further enhance its appeal as an investment destination, Komaroff said.

Lujiazui Forum is a beacon for global engagement and offers a positive environment for open discussions, it also provides a superb platform to highlight the considerable progress on China's reform and opening-up of the financial sector, John McLean, chair of the Institute of Directors, the City of London and also chair of China UK Business Development Centre, told the Global Times.

"It is quite clear that China is committed to the opening-up of the financial sector with a clear vision for services which promote economic and social development. In my visits around China over the last 18 months, I can see that the opening-up process is actually happening, particularly in areas such as green finance, cross-border investment and digital finance," McLean said.

The City of London is the global financial center with specific strengths including asset management, pensions, insurance, green finance and financial and professional services which all provide substantial areas for further cooperation and collaboration with China, McLean added.