The head of the Chinese central bank has touted the use of the country’s financial inclusion campaign to help the economy to successfully weather the impacts of the COVID-19 pandemic.
“China’s successful response to the shock of COVID-19 amply proves that the Chinese socialist market system is the world’s most resilient system,” said Yi Gang, head of the People’s Bank of China (PBOC), during a speech delivered on 20 October at the 2021 Financial Street Annual Forum (2021金融街论坛年会).
Yi highlighted the key role that the financial sector and markets play under China’s current mixed economic system.
“Under the socialist market economic system, the function of finance is mainly to better allocate resources, and at the same time to continually provide risk management and other financial services to market actors,” said Yi.
“For example, the financial allocation of resources is mainly through pricing, and continually enabling financial resources such as loans, bonds, shares and insurance to flow toward competitive enterprises, enabling various market actors, including micro and small enterprises, to obtain financing and achieve healthy growth.
“During this process, the financial market will further discover and adjust prices…in recent years, market actors have seen reductions in their financing costs via the continual adjustment of prices, which is of benefit to the ongoing resolution of the perennial problem of financing being difficult and expensive. Financial inclusion has also obtained upgrade.
“The integration of the function of finance with the mechanism of the market can continually strengthen the resilience of the market, and at the same time raise the efficiency of resource allocation by the market, enabling resources to flow towards the most competitive enterprises.”
Yi also highlighted the critical role that financial inclusion measures made to the resilience of the Chinese economy during COVID-19.
“Last year the People’s Bank of China (PBOC) launched 300 billion yuan, 500 billion yuan and one trillion yuan in monetary and loan policies to support market actors, and in September added another 300 billion yuan in reloan funds.
“These policies are mainly to support the development of micro, small and medium-sized businesses…at present the number of market actors supported by financial inclusion micro and small-loans already exceeds 40 million. For this many market actors to be able to obtain financing is an outstanding bright spot for the resilience and financial activeness of the Chinese economy.”