China’s top financial regulators have issued a directive calling for greater financial support for common prosperity pilot schemes in the affluent coastal province of Zhejiang.
On 18 March the People’s Bank of China (PBOC), the China Banking and Insurance Regulatory Commission (CBIRC), the China Securities Regulatory Commission (CSRC) and the Zhejiang province government jointly issued the “Opinions on Financial Support for Zhejiang’s High-quality Development and the Establishment of Common Prosperity Demonstration Zones” (关于金融支持浙江高质量发展建设共同富裕示范区的意见).
The Opinions call for “providing preferential financial support for reform trials in relation to common prosperity.”
President Xi Jinping stressed the need for “common prosperity” as a key policy theme in September 2021, stating that greater efforts are needed to narrow the fast-expanding wealth divide in China.
The Opinions outline a total of 31 measures for supporting the creation of common prosperity zones in Zhejiang province, while also placing emphasis on support for green financing.
Specific measures include:
- Optimising basic financial services for rural villages.
- Driving further reforms of rural village credit societies, for the goal of maximising service provision.
- Exploring differentiated policies with regard to capital, equity structure and legal person governance.
- Reducing financial costs for micro-and-small enterprises.
- Accelerating the establishment of a rural village credit society financial inclusion system to service common prosperity goals.
“[We must] make regional disparities, rural and urban disparities, and income disparities the main direction of attack, and better satisfy the financial needs of the general public in pursuing a better life and achieving constant growth,” said the Opinions.
“[We must] employ the active role of finance in income allocation and social welfare, and drive the formation of an olive-shaped social structure in which the middle-income demographic is the main component.”
The release of the Opinions indicates that finance sector policy will play a greater role in driving China’s common prosperity goals, which market observers had previously believed would be primarily driven by fiscal and tax reforms.