China Singapore Finance, December 31 (Reporter Xia Bin) 2022 is approaching. The Central Economic Work Conference, which sets the tone for next year's economic work, will also focus on the financial industry to make a series of deployments.
What can the financial industry do for the Chinese economy in the new year?
The "China Singapore Finance 2021 Annual Conference" cloud dialogue "Financial Industry Promise Innovation" was held recently, and many guests gave answers.
Support small and micro enterprises
The role of small and micro enterprises in China's economic development is self-evident, but for financial institutions, such enterprises do have higher risks or uncertainties.
How to balance risks and support development?
Chen Daofu, deputy director of the Institute of Finance of the Development Research Center of the State Council, believes that the real value of small and micro enterprises should actually be seen in the economic ecology built by large enterprises.
Its value lies not in how strong it is, but in being deeply embedded in the supply chain, providing the goods and services it can provide in the economic cycle, and many supply chain finance can provide good financial support for the virtuous circle of enterprises.
Regarding the difficulty and expensive financing of small and medium-sized enterprises, Chen Daofu said that this is because they did not discover or really see the value of the enterprise, and at the same time, the small and medium-sized enterprises have not obtained the real recognition and trust of financial institutions.
He said that when the government uses various policies to help financial institutions serve small and micro enterprises, they can obtain relatively low costs.
At the same time, it is also necessary to use supply chain, digitalization, and use intermediary agencies to play an enabling role, so that finance can better serve small and micro enterprises, and in the process of common growth, so that finance and industry, especially small and micro enterprises, can achieve better value Process of creation and wealth creation.
Actively do a good job layout
When China's economy faces the triple pressure of demand contraction, supply shock, and weakening expectations, what contribution can the financial industry make under the requirement of "stability"?
Lu Ting, chief economist of Nomura Securities China, said bluntly that it is necessary to see clearly the trend of China's economic growth and the overall situation of future development, and to observe the important drivers of driving the economy. Geography will pay more attention to the construction of central cities and urban agglomerations, and industry will pay more attention. Hard investment in technology, so from the perspective of financial services to the real economy, on the one hand, we must do a good job in the geographical layout, on the other hand, we must do a good job in the industrial layout.
"Don't follow the crowd, don't follow the crowd." Lu Ting also mentioned that not only must we seize the "dual carbon" opportunity and deploy new energy and other hot industries, we must also avoid short-term long-term goals.
It is necessary to judge the situation and not to fall into a bubble. China is still a coal-based energy structure.
In addition, Lu Ting said that when some sectors panic, they need to seize the opportunity.
In this way, not only financial companies can profit from it, but also provide economic support. For example, securities companies and investment banks should actively participate in mergers and acquisitions, so that the real estate industry can have a soft landing.
Deal with hidden risks
Risk prevention requires "precise bomb disposal". What are the hidden dangers in China's financial industry that need attention next year?
Tian Lihui, Dean of Nankai Institute of Financial Development, pointed out that in recent years, China’s financial risk management has been effective. Issues such as high interest rates, bond holdings, stock market speculation, stock pledges, guarantee chains, P2P, and private digital currencies have all been precisely dismantled. Resolved one by one, but there are still four potential financial risks.
One is the potential risk of contagion from the international financial crisis.
China must clarify the status of a major country, clarify the reality and possibility of the domestic cycle, manage expectations, stabilize confidence, and prevent the spread of risks that may come from abroad.
The second is the real estate market risk.
Some real estate companies currently have poor sales and cash flow problems. This situation needs to be dealt with as a whole.
If it is just an individual company, it should follow the laws of the market. If it is an industry problem, it must be taken seriously.
The third is the risk of some small and medium banks.
If risky small and medium-sized banks can be acquired and merged by better banks, and can better restructure their assets, not only can the crisis be avoided, but it can also become an opportunity for the banking industry to adjust the industry structure.
The fourth is the response to risks of local government debt issues.
Local governments do have large debts, and they must be confident and self-disciplined when responding, which means that they cannot continue to accumulate debt risk problems while doing a good job of financial management.
If the financial management can be done well and the cash flow can be allocated well, the local government risk is not big.
Strive for the "dual carbon" goal
What role can finance play in achieving the "dual carbon" goal?
Chen Daofu pointed out that there are currently three areas that can be focused on.
First, the scale of investment demand for low-carbon green development is very large, and all parties have expectations for the support of the financial industry.
Chen Daofu said that the financial industry has its own set of mature methods in the process of serving the development of an industry. Financial industry services for "dual carbon" or green development will first focus on the areas of incremental investment in order to achieve these goals.
Second, the financial industry can provide better incentive and restraint mechanisms to guide the existing behavior of society to become greener and more environmentally friendly.
For example, Chen Daofu said that the equity investment market is now advocating ESG investment, including green bonds and green loans.
The central bank has also designed a special refinancing tool for the clean and efficient use of coal to guide the society to pay more attention to green and low-carbon environmental development.
Third, finance can play a certain role in the carbon trading market.
Chen Daofu believes that China has now established a carbon exchange, which provides a trading venue for more effective allocation of carbon allowances.
Finance can balance the relationship between environmental protection and economic efficiency through market coordination mechanisms.
Dedicated to common prosperity
Regarding common prosperity, Lu Ting believes that we must prevent long-term goals from being short-termized, and "protracted warfare" becomes "assault warfare."
How does the financial industry "make profit" for common prosperity?
Lu Ting said that this issue should be treated dialectically.
First of all, we must allow the market mechanism based on the rule of law to properly allocate resources. Most financial companies should follow the laws of the market, and the main task is to make the "cake" well.
From the perspective of financial regulatory agencies, Lu Ting believes that supervision should be done well, and some financial institutions should not be allowed to "have nothing to do", such as engaging in illegal fund-raising and Ponzi schemes.
A good regulatory framework should be established to encourage financial companies to compete, which is also conducive to reducing various transaction costs in the financial sector.
From the perspective of development finance, the national strategy must be taken into consideration, and it should not compete with the people for profit or compete with market-oriented financial institutions.
However, where the market cannot reach, such as infrastructure construction in impoverished areas, and guarantee subsidies for small, medium and micro enterprises, development finance should play a more important role.
Lu Ting also mentioned that to promote common prosperity, we must make full use of financial technology, do a good job in supply chain finance, use big data to use collateral more efficiently, or use liquid assets, reputation, etc. without fixed assets as collateral. Intangible assets can better and more conveniently serve the majority of small and medium-sized enterprises and consumers.
"When talking about common prosperity in the financial industry, we don't mean'letting out profits', but about'win-win'." (End)