The senior-most figure in China’s banking regulatory system said that the private sector and fintech are playing a pivotal role in the country’s economic growth story.
Speaking at the 2019 Tsinghua Wudaokou Global Finance Forum on 25 May, Guo Shuqing (郭树清), party secretary of the Chinese central bank and chair of the China Banking and Insurance Regulatory Commission (CBIRC) refuted claims that the rapid growth of the Chinese economy was the result of “state monopoly capitalism.”
“In actuality, the composition of the Chinese economy is already undergoing marked pluralisation…the market share of state-owned enterprises has continually declined.
“Additionally, the GDP share of government economic activity and the state-owned economy is less than 40%, very many state-owned enterprises are also listing both domestically and abroad, and are in fact joint-stock enterprise – there are extremely few pure, 100% state-owned enterprises.
“With regard to large-scale state-owned enterprises, they have a large number of subsidiary companies whose controlling rights have already been ceded to private enterprises. Even though they are central state-owned enterprises, they are mutually situated in a state of competition.
“At present, private enterprises and foreign capital have entered nearly every sphere or sector, and there are no restrictions or barriers…we uphold the principle of competitive neutrality, and stress that all market actors are treated equally.
“The financial sector has already formed a pluralised environment, and there are both state-owned share-controlled financial institutions and privatised foreign-invested financial institutions, there are listed institutions and rural credit societies as well as natural person shareholders.
“At present there are 4588 banking sector institutions in China, of which over 3000 are share controlled by privately run institutions. The majority of 170 China-invested insurers are privately controlled, and the majority of brokerages and fund companies are primarily privately controlled.
“Even for the big five banks the average social equity share is as high as 30%, and even exceeds 40% for some.
“It must also be pointed out that the market share of China’s big five banks is only 37%, very closely approaching the market shares of the top five banks in countries such as the UK and the USA.
“Another classic example is fintech, which in China is growing rapidly, is widely employed and occupies a world leading position.
“A very important factor is that the government adopts an attitude of prudence and accommodation with regard to private internet enterprises, and operates a fair competitive environment.
“The large state-controlled banks have adopted an attitude of competitive cooperation from the beginning – for example ten years ago Alipay was born, matured and grew strong amidst payments cooperation with China Construction Bank.
“Today all the fintech companies are entering cooperative partnership relations with large and medium-sized banks, and other banks are also vigorously developing fintech and cooperating with fintech companies with regards to areas including fund raising, payments and settlement and financial inclusion.
“They are mutually supplementing shortcomings with strengths, and the results are highly apparent.”