Liu He Highlights Five Key Work Points for China’s Financial System at 2020 Lujiazui Forum

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One of China’s top finance officials has outlined a slew of key policy focal points in the wake of the COVID-19 pandemic at the 2020 Lujiazui Forum in Shanghai.

In a speech delivered at the opening of the Lujiazui Forum on 18 June, vice premier and Politburo member Liu He (刘鹤) said China’s financial system was at a critical stage of development given the impacts of both the COVID-19 pandemic and current efforts to draft the country’s 14th Five Year Plan.

Liu highlighted five key work points in particular for upcoming policies in relation to China’s financial system:

  1. Stable monetary policy which is more flexible. Strengthen counter-cynical adjustments, firmly uphold overall policy moderation, maintain rationally ample liquidity, expedite positive feedback between finance and the real economy, and fully support effective performance of the Six Guarantees and the Six Protections.
  2. Service the real economy, expedite transformation and upgrade of the economy. Be guided by high-quality development, deepen supply-side structural reforms. Adapt to the needs of various market actors, vigorously clear out blockages in monetary transmission, engage in innovation of financial products, optimise the financial structure, increase the share of micro and small enterprise loans, credit loans and manufacturing sector loans.
  3. Uphold “system establishment, non-interference, zero tolerance,” accelerate the development of capital markets. Uphold the principles of marketisation and the rule of law, improve basic systems for information disclosure, issuance and market withdrawal; strengthen the convenience of transactions, market liquidity and market flexibility, and improve systems for encouraging medium and long-term funds to undertake value investment. Strengthen supervision of market intermediary organisations, and significantly raise the strength of strikes against illegal conduct such as financial forgery. Better protect the interests of investors.
  4. Risk response must move ahead of the market curve. Amidst downwards economic pressure and various uncertain factors, strengthen forecasting and understanding of the market, effectively balance maintenance of growth with risk prevention, increase the effectiveness of financial regulation and financial institution governance mechanisms. “We are fully confident and capable of dealing with any internal or external risk shocks, and achieving stable operation of the financial system.”
  5. Deepen reform and opening. China will firmly and unswervingly deepen reform and expand opening, accelerate the unveiling and implementation of financial reform and opening measures, and protect the lawful rights and interests of foreign invested enterprises. Create conditions and environments, expunge interference, jointly implement the Sino-US phase-1 trade deal. “The Chinese central government will firmly uphold ‘One Country Two Systems,’ support Hong Kong in playing a key role as an international financial centre, and pragmatically protect the rights and interests of enterprises and investors from all countries in Hong Kong, and uphold Hong Kong’s long-term prosperity and stability.”

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