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RMB Internationalization as a New Driving Force for China’s Economy: Abstract:
The Prospects for the RMB to Trade Directly with the CAD and AUD: Abstract:
An Analysis of the WTO Case Between the U.S. and China: Abstract:
Distribution is the Key to Reform in China: Abstract:
Managing Disputes over Bank Card Payment Fees: Abstract:
Promote the Development of Industrial Finance: Abstract:
China’s Economy in the Next 20 Years: Abstract:
China Requires a Second Economic Reform to Respond to Future Challenges: Abstract:
Financial Services for the Real Economy: Abstract:
The Need for Innovation in Providing Financial Services for Seniors: Abstract:
Shifting the Focus of Financial Reform to Small Enterprises and Residents: Abstract:
Developing the Wealth Management Industry in China: Abstract:
Analysis of China’s Offshore Financial Market Development: Abstract: In recent years, the development of offshore financial markets has been attracting attention; but different from the topic of an offshore RMB market, this is about innovations in the domestic offshore market. Major international financial centers are often offshore financial centers. By guaranteeing effective risk control and strengthening market regulation, China is giving priority to promoting the construction of domestic offshore markets in the process of economic and financial internationalization.
Building New Regional Financial Service Centers in China: Abstract: Building financial centers has become a hot topic in China. In addition to the national strategy of developing Shanghai as an international financial center, many local governments have proposed constructing various types of regional financial centers. Although China’s economy continues to expand, building a number of regional financial centers at the same time is clearly unrealistic. In addition to analyzing different types of financial centers, this article proposes that the development focus should be on the construction of regional financial service centers which can support the real economy.
Governance Mechanism Reform for Commercial Banks in China: Abstract: A sound corporate governance system is the basis for a bank’s long-term and stable development. The banking industry in China has built a modern commercial bank governance structure through reforming the share-holding system and has made considerable achievements. However, the corporate governance system still has many defects which may lead to potential risks. This paper presents an analysis.
Improving the Local Financial Ecology in China: Abstract: Since Zhou Xiaochuan, governor of the central bank, proposed the concept of “financial ecology”, all local governments have stressed the necessity to improve their financial ecologies, thus providing a healthy foundation for the development of the financial industry. Financial ecology refers to the financial environment at the micro level, including systems, mechanisms, infrastructure, and personnel. This paper provides an analysis for improving the financial ecology for local governments.
The Impact of Interest Rate Marketization on the Trust Industry: Abstract: The so-called interest rate marketization process is designed mainly to establish an interest rate formation mechanism, determined by market supply and demand, for deposit and lending rates of financial institutions. Through the use of monetary policy tools to control and guide interest rates in the market, the market mechanism will play a leading role in the allocation of financial resources. At the same time, the trust industry is the forerunner in promoting interest rate marketization, and it will also usher in new historical opportunities and challenges in the context of accelerating the interest rate marketization process. This article provides an analysis.
The Motivation for Financial Reform in Wenzhou: Abstract: The primary motivation for the financial reform in Wenzhou, which was launched in March 2012, came from the businesses and local government of Wenzhou, but the central government has also played an important role. In this paper, the financial reform will be analyzed at both the local and central government levels.
Direction for Interest Rate Liberalization: Abstract:
Financial Reform and Innovation in China: Abstract:
Financial Reform and Innovation in Qianhai District of Shenzhen: Abstract:
Reform of the Natural Gas Pricing Mechanism: Abstract:
Reform of the Refined Oil Pricing Mechanism: Abstract:
Will Canada Block the Nexen- CNOOC deal?: Abstract:
Direct Exchange between the Chinese Renminbi and the Canadian Dollar: Abstract:
Direct Financing and Capital Market Reform: Abstract: Direct financing is a core concern of policy authorities and academia in China and is also regarded as a focus for optimizing the country’s financial structure. Over the years, the expansion of direct financing has often been closely linked with the capital market, but because there are many conflicts and errors, this reform has always been delayed. This paper will provide an analysis.
Further Thoughts on RMB Exchange Rate Reform: Abstract: The issue of the RMB exchange rate continues to cause widespread concern at home and abroad. Since the second half of last year, the two-way volatility of the RMB exchange rate against the U.S. dollar has aroused heated discussions. The expectation that the RMB will appreciate unilaterally has vanished; meanwhile, some people have been worried that the devaluation of the RMB will affect the process of internationalization. This paper argues that this situation provides more motivation and freedom for further reforms of the RMB exchange rate mechanism.
New Capital Regulations for Commercial Banks: Abstract: At the executive meeting of the State Council on June 6, Commercial Bank’s Capital Management Approach (Trial Implementation) was issued, and it is to be implemented next year. It can be concluded that a capital regulatory system is being established to meet new international regulatory standards in this new management approach, which better integrates the current banking developments in China and strives to reach the goal of serving the real economy while reflecting the localization and improvement of Basel III. This article will provide an analysis of its positive significance and upcoming challenges.
Promoting Interest Rate Marketization in China: Abstract: The process of interest rate marketization has had a profound impact on Chinese economic and financial operations. On June 8, the central bank started marketizing interest rates while cutting them at the same time; the upper limit of the floating range of deposit rates for financial institutions was adjusted to 1.1 times the benchmark rate, and the lower limit of the floating range for loan rates was adjusted to 0.8 times the benchmark rate. This major financial reform has aroused widespread concern; this paper provides an analysis of interest rate marketization in China.
Prospects and Principles for Promoting Financial Innovation: Abstract: The goals of financial innovation are to develop new financial functions, meet the internal needs for the growth of the real economy, and improve the efficiency of service provision, either by introducing new financial elements or re-combining existing elements. Accelerating financial innovation is vital for the sound development of China’s financial system and the real economy. This paper analyzes the prospects and principles for promoting domestic financial innovation.
Which Currency will Follow the Yen?: Abstract: We wonders whether, after the agreement to allow direct trade between the yen and the renminbi, the Korean won and Taiwan dollar could be next as China pushes on towards full internationalisation of its currency.
Insurance Consumer Protection Issues in China: Abstract: The Insurance Consumer Protection Agency was established by the China Insurance Regulatory Commission at the end of October 2011 to put the issue of protecting the rights and interests of consumers in a more prominent position. The establishment of the Insurance Consumer Protection Agency is in line with the new trend in international insurance regulation. Nevertheless, China’s insurance industry continues to face many challenges in protecting the interests of consumers and there are still many unresolved problems. This article provides an analysis of this issue.
Why Does the Banking Sector Maintain High Profits?: Abstract: The high operating profits of banks have once again attracted widespread interest and led to wide-ranging discussions. In the context of declining profits and limited prospects within the real economy, high profits in the banking sector naturally lead to criticisms and accusations of trade monopoly, interest rate protection, arbitrary charges, and so on. This paper provides an analysis of this issue.
The Prospects for Foreign Trade Development in China: Abstract: China has made enormous achievements since its accession to the World Trade Organization (WTO) a decade ago. But, due to the long-term imbalance in development, many negative issues have arisen during the development of China’s foreign trade. Increasingly widening gaps in domestic regional development, serious environmental pollution, aggravated trade frictions, an over-sized international payments surplus, RMB appreciation, the passive growth of the money supply, speculative capital flows, major fluctuations in related domestic asset prices and international energy prices, and other significant external shocks have all created challenges for China’s long-term open development pattern which focuses on attracting investment and processing and exports. This article provides an in-depth analysis of these issues.
Shadow Banking in China: Abstract: The shadow banking systems of the United States and other countries have been affected by and in many ways blamed for the recent financial crisis. The Financial Stability Board (FSB) has issued a proposal for regulating the shadow banking systems in its member countries. As a result, China’s shadow banking system has become a sensitive topic that requires further examination. This paper attempts to analyze the state of the shadow banking system in this country.
Internationalization of Local State-owned Financial Institutions in Shanghai: Abstract: At present, there are a total of 16 financial institutions under the jurisdiction of the Shanghai municipal government which are active in the insurance, banking, securities, trust, funds, and other financial fields. In the long run, the internationalization of local state-owned financial institutions is not only an important component in the internationalization of China’s financial system, but it is also conducive to financial development and the modernization of the local economies. This article provides an in-depth analysis.
Financing Problems for Small and Medium-sized Enterprises: Abstract: The financing difficulties for small and medium-sized enterprises have received attention from both the public and the government, which has stressed that the problem should be a key concern for policy makers. In spite of this, these difficulties have not been solved; in fact, to some extent, they have intensified. The reasons for these problems are analyzed in this paper, and the thoughts on corresponding policy decisions are also offered, from the view of the government as well as from the banks.
Solving the Financing Problems for Micro and Small Enterprises: Abstract: Micro and small enterprises (MSEs) are of great significance for stable and rapid economic development, but the rising costs of production, financing problems, and non-standard market environment have imposed substantial development pressures on these entities. The government has started to introduce a series of new support measures for MSEs since last year. This paper will analyze the functions of MSEs and their financing problems and propose basic solutions for these issues.
Local Financial Development and Competition in China: Abstract: Local financial problems have recently caused widespread concern. On March 28, 2012, participants at the executive meetings of the State Council approved the implementation of the experimental zone plan for comprehensive financial reform in Wenzhou, Zhejiang Province. They also prioritized 12 key tasks for this reform, including standardizing the development of private financing, accelerating the development of new financial organizations, and developing professional asset management agencies. On April 12th, 2012, participants at the executive meeting of the Shenzhen municipal government discussed and approved Suggestions Regarding Strengthening and Improving Financial Services to Support the Development of the Real Economy, which included a number of financial innovations such as cross-border RMB loans between banks in Shenzhen and Hong Kong. These proposals immediately led to heated discussions throughout the market. This article provides an analysis related to the reasons for, and the characteristics and consequences of local financial competition, and outlines corresponding countermeasures.
Microfinance Company Development in China: Abstract: Microfinance Companies mainly provide small, scattered, and short-term funding for enterprises and individuals. Since the China Banking Regulatory Commission (CBRC) and the central bank issued Guidance on Microfinance Company Pilot in 2008, the microfinance industry has entered a period of rapid development in China. Microfinance companies, among so many micro-credit institutions, are growing to be an important component and backup in the domestic micro-credit market. This paper will provide an analysis of microfinance development problems and suggest directions for reform.
The Proposals for the Rural Social Security System Reform: Abstract: Generally speaking, the long-term prejudiced view treating the rural regions as inferior to the urban regions and the consistent urban growth sacrificing the interests of the peasantry not only have caused potential social contradictions, but also resulted in obstacles to the coordinated development of urban and rural economies. Thus the solid improvement of rural social security system is of great practical significance for both the steady development of society and the stimulation of rural economic vitality.
A Soft Landing for Real Estate Investment in 2012: Abstract: In December 2011, real estate investment increased by 27.9%, maintaining a high level. It has been widely accepted that real estate investment will tend to decline in 2012, but there is disagreement on the extent of the decline and the magnitude of the impact it will cause. The key point is that the extent of the decline can be either a periodic adjustment resulting from regulation and controls, or an adjustment which will last for a long time. The extent of the real estate decline in 2012 will mainly depend on three factors: the first is the extent of the decline in real estate investment; the second is the hedging efforts of indemnificatory housing investment; the third is to what extent can financial risks in real estate be released.
Banking Reform Under the Condition of Interest Rate Liberalization: Abstract: The Chinese government has determined that interest rate liberalization and improvements in the RMB exchange rate formation mechanism will be the focus of financial system reform. Zhou Xiaochuan, the Central Bank governor, has also pointed out in his recently published paper that the conditions for further advancing interest rate liberalization have basically been met. This paper will explore new opportunities and challenges for financial institutions in the banking industry resulting from the liberalization of interest rates.
Develop Small and Micro Banks in the Next Stage of Financial Reform: Abstract: The development of small and micro banking institutions in the next stage of financial reform must be a priority as it will assist in the adjustment of the overall financial structure, promote the movement towards market-oriented interest rates, and enhance financial development in rural areas. Various types of financial institutions should be encouraged to find their market positions in providing banking services for small and micro enterprises, and access to the financial market must be eased to encourage the development of small and micro financial institutions such as small loan companies. Well managed small loan companies should be encouraged to transform into village and town banks, and financing ratio constraints for small loan companies receiving loans from banks should be relaxed. A micro financing infrastructure must be established so as to allow various financial institutions to compete in the small and micro financial market.
Establishing a Deposit Insurance System in China: Abstract: In China, the proposal to establish a deposit insurance company was put forward a long time ago. With the expansion of market-oriented financial reform, and concerns about macro-financial prudence caused by the financial crisis in 2008, a deposit insurance system is once again being proposed as a part of reforming the Chinese financial system. This article provides an analysis.
Measures to Optimize the Monetary Policy Control Mechanism in China: Abstract: In the 12th Five-Year Plan period (from 2011 until 2015), it has been decided that the main goals of monetary policy will be to enhance the decision making mechanism and improve the structure and environment for policy transmission. Judging by the practical experience gained from 2001 to 2010, a series of monetary policy mechanism innovations must be implemented in order to achieve these goals. This article examines this issue.
The Conditions for Interest Rate Reform: Abstract: The market-oriented reform of interest rates refers to the gradual relaxation of controls which would allow the price of capital to be determined by market supply and demand. Since 1996, China has systematically promoted the market-oriented reform of interest rates; after ten years of efforts, it has achieved some progress and created the basic conditions for moving further. Meanwhile, as social financing becomes more diversified, a variety of problems caused by interest rate controls have provided the motivation for promoting these reforms.
The Development of Shanghai as an International Financial Center: Abstract: The development of Shanghai as an international financial center has been upgraded to a national strategy. This is not only of great significance for the economic and social development of Shanghai, but will also have a far-reaching influence on the economy of surrounding areas and the entire Chinese nation. However, compared to a typical global financial center, Shanghai still has much to do in developing its financial markets.
The Development of the Hong Kong Offshore RMB Market: Abstract: Use of the RMB for settlement of cross-border trade has boosted the rapid growth of offshore RMB businesses. At present, an offshore RMB market with Hong Kong as the center has been formed. This article provides a summary of the status of offshore RMB markets, an analysis of challenges to be addressed, and predictions and countermeasures based on developments in the domestic financial market. Since the implementation of RMB settlements for cross-border trade, offshore RMB businesses have grown rapidly, and some new development trends have emerged, which require further analysis.
The Futures Markets in China: Abstract: In the past year, although the transaction volume in China’s commodity futures market experienced varying degrees of decline, the stock index futures market, which has operated for a full year, has entered an era in which institutions are the main investors. This has provided a good demonstration for the entire futures market. In the long run, the regulatory authorities will continue to introduce more policies and institutional changes targeted at futures markets, which will bring new opportunities and challenges.
Two Recommendations for Improving China’s Monetary Policy Control Targets: Abstract: Monetary policy is one of the main components of macroeconomic control. Optimizing the target system for monetary policies, establishing a sound monetary policy decision-making mechanism, and improving the transmission mechanism and environment for monetary policies, are the main proposals for improving the monetary policy system included in China’s National 12th Five-Year Plan. This article analyzes how to improve the regulation and control of monetary policy targets.
A Summary of the Local Government Bonds System in China: Abstract: On October 20th 2011, the Ministry of Finance proclaimed that the local governments of Shanghai Municipality, Zhejiang Province, Guangdong Province and Shenzhen City could issue their own bonds. A heated debate regarding local government bonds has developed. In 2012, a dozen pilot zones with the authority to issue local bonds will be established in eastern coastal areas. Many problems related to this new phenomenon need to be explored. This article analyzes these problems and examines directions for further research.
Financial System Reform in China: Abstract: There have been some achievements in reforming the financial system in China—more financial institutions with improved governing structures have been established, new products are emerging along with steadily rising trading volumes, the rural financial system has been improved, and the rural financial market has rapidly developed. Furthermore, financial laws and regulations have been refined, but compared with the economic development process, there are still many imperfections in the financial system. It is clear that the government intends to carry out these reforms in the long run. This article discusses financial system reform in China.
Improving the Macroprudential Regulation System in China: Abstract: After the financial crisis, there is a general consensus that the financial regulatory system lags far behind the various levels of financial development, and that this was a key factor leading to the emergence and spread of the problem. In view of this, many countries have proposed their own financial regulatory reform programs, with the goal of strengthening macroprudential regulation being one of their core objectives. Although the financial crisis has had a limited impact in China, the country continues to emphasize the importance of macroprudential regulation as a part of the process for improving the financial regulatory system. An analysis of this issue is provided in this article.
Measures to Reform the Chinese Bond Market: Abstract: In recent years, government decision-makers in China have attached great importance to the development of the domestic bond market, including the market for government bonds. A report from the 17th CPC National Congress indicated that the capital market structure should be optimized and the proportion of direct financing through multiple channels increased. The report also indicated that a multi-level capital market system should be established, various bond markets should be developed, and the scale of debt financing expanded, while promoting equity financing. Taking the actual conditions in China into consideration, this paper advances several proposals for promoting the reform of the domestic bond market.
Private Lending in China: Risks and Responses: Abstract: As a convenient, spontaneous and endogenous means of financing, private lending activities have existed without incident for a long period of time in China. These activities have not been accompanied by high risks and have become a favorable supplement to the regular financial system. However, in the last two years, the volume of private lending has expanded rapidly and the variety of participants has become more extensive, leading to widespread general concern. This paper provides an analysis of the private lending issue from the perspective of risk and proposes corresponding countermeasures.
Reforming the Financial Regulatory System in China: Abstract: In recent years, the financial regulatory system in China has been improved, gradually absorbing lessons from foreign experiences, and has developed regulatory concepts with Chinese characteristics. On this basis, with the further development of the domestic economy and the growing demand for diversified financial services, the financial system will become more liberalized and financial markets more active, increasing the requirements for financial regulation.
Reforming the Money Market in China: Abstract: In China’s financial market system, the reform of the money market, which is being done earlier than the reform of the capital market, has basically adopted a market-oriented framework. However, compared with its substantial economic influence and the growing financial needs, many aspects of the money market in China still need to be improved. This article provides an analysis of issues related to the Chinese money market and then suggests areas to focus reforms during the 12th Five-Year Plan period.
Strategies for Internationalizing the RMB: Abstract: Currency internationalization is a process whereby a specific currency evolves from a national to an international currency. The internationalization of the RMB has become an important issue both at home and abroad. Many people have expressed uncertainty about this process, but an increasing number of academics believe that internationalization conforms to the reform objectives of the international currency system and is needed for economic and financial development in China. This paper provides an analysis of this issue.
The Derivatives Market in China: Abstract: Financial derivatives emerged against the background of risk management and function as a means of risk aversion, price discovery and resource allocation, so they are of strategic importance for the security and stability of the financial markets and economic development in any country. China’s derivatives market has developed rapidly in recent years and the corresponding regulatory system is constantly being improved. This article examines the issues related to financial derivatives in China.
The Strategic Focus for Rural Financial Reform in China: Abstract: In 2012, there will be many opportunities and challenges related to the increasingly urgent need for rural financial reform in China. Although the pace of financial reform in the rural economy has accelerated in recent years, new ideas are needed in relation to the focus, strategies, the stages of development, and so on. In this article, the policy environment and future strategic focus for rural financial reform are analyzed and proposals are made about how banks can address the “three rural issues” related to rural areas, agriculture, and farmers.
Internationalization of the RMB: Current Status, and Existing Challenges: Abstract: In the 30 years since the reform and opening up, the Chinese economy has become increasingly integrated into the global economy. During the period of rapid increase in the Chinese GDP, the international markets have had a corresponding increase in demand for the RMB. Furthermore, the volatile fluctuations in the major international currencies caused by the international financial crisis and the changes in the patterns of international economic governance have significantly expanded the demand for the Chinese currency. Stimulated by market demand, China has also taken a series of complementary measures to actively and steadily promote the process for internationalizing the RMB.
Internationalization of the RMB: Future Steps: Abstract: Foreign experience shows that controls over the capital account are necessary, and hasty or excessive openness in the short term is likely to lead to the flow of a large amount of international capital. If it cannot be properly managed, it may impact on domestic asset prices and the stability of financial markets. Therefore, the internationalization of the RMB should be advanced in an orderly progression, so that the process of opening the capital account can match the demand for the cross-border flow of the RMB, be parallel to the process of reforming and re-constructing the domestic financial market, and adapt to regulatory requirements for preventing the impact of international capital flows. The process of opening up the capital account should be managed appropriately, thus it can become an important driving force in further enhancing the internationalization of the RMB.
Countermeasures to Further Promote the Reform of China's Banking Sector: Abstract: In recent years, there have been two entirely different views about the development of the banking sector in China. One view is that successful banking reforms have basically been implemented since the beginning of the century, and that the development indicators for China’s commercial banks are also ranked among the top on an international basis. The other view is that the success of the banking sector is due to the excessive protection it receives from the government, that there are hidden problems which will affect sustainability, and that the excessive growth in the profitability of banks has affected the real industry sector. In this article, macro-policies and specific measures for furthering the reform of the banking sector are proposed.
Strategies and Priorities for Financial Regulation Reform in China: Abstract: In recent years, the financial regulatory system in China has been enhanced, often by absorbing relevant aspects of the U.S. model, but there are still some defects to be addressed. Since the financial crisis, the American government has taken steps to reform U.S. financial regulation. China should learn from the experience of these reforms, and, based on its own conditions, make further improvements in its own financial regulatory system.
Long Term Challenges for the Chinese Economy and Priorities for Macro-control Policies: Abstract: Since the 2008 financial crisis, the Chinese economy has exhibited strong potential for recovery and growth in comparison with the economies of the developed nations. However, with the increasingly complex nature of the international and domestic environments, the challenges confronting China’s economy will become increasingly prominent in 2012 and throughout the following years. Therefore, the general direction of macro-control policies needs to be reformed, and the fundamental contradictions in the country must be actively addressed.
Countermeasures to Improve the Interbank Market in China: Abstract: The interbank market in China can be categorized into the following sub-markets: the interbank lending market, bond market, foreign exchange market, derivatives market, and gold market. Although the interbank lending market has reached a high level of maturity, the core issue for the remaining sub-markets is that the structure of the market investors is flawed, a problem which needs to be addressed immediately. This article will provide an analysis of this issue.
The Use of Monetary Policy to Regulate and Control the Real Estate Market: Abstract: The Chinese central government has implemented real estate control policies for several years in order to prevent increasing housing prices from affecting economic and social stability. Monetary policy has gradually played a more and more important role in this process. In this article, the relationship between monetary policy and the real estate market will be analyzed, and the deficiencies in policy operation and implementation will be discussed, in order to find a direction for further improvement.
Promoting Industrial Restructuring with Outward Foreign Investment: Abstract: A rationalized, advanced and efficient industrial structure is one of the key factors in promoting the sustainable development of China’s economy. At the same time, expanding outward foreign direct investment is also a key component of the country’s strategic direction, and is closely related to domestic industrial restructuring. Based on an analysis of their relationship, this paper makes some proposals on optimizing the industrial structure by encouraging outward investment.
Restructuring and Optimizing the Financial System in China: Abstract: China has gradually improved the structure of the financial system through ongoing economic and financial reforms, but, compared with the developed market economies, there are still defects in some areas. The current situation in which financial development lags behind the pace of economic development is largely the result of the fact that there are structural flaws in the financial system, so the government must take actions to restructure and optimize the financial system.
The Reform of China’s Financial Service Institutions for Small and Medium-sized Enterprises: Abstract: The financing difficulties for small and medium-sized enterprises (hereinafter referred to as SMEs) have always plagued China’s economic and social stability, and they have become the focus of attention for all levels of government. In order to strengthen the financial support for SMEs in recent years the regulatory authorities have encouraged commercial banks to create specialized institutions for financial services, which have played a certain role but, at the same time, have also reflected many fundamental problems. These phenomena are analyzed and some strategies for reform are proposed in this article.
Adjustments in China’s Import Tariffs: Abstract: China’s foreign trade strategy is currently transforming away from its emphasis on exports and the attraction of foreign investment to a policy which attaches equal importance to imports and exports as well as attracting foreign investment and making investments abroad. From a strategic perspective, corresponding tariff policies are required to encourage imports and in 2011, China will implement a low annual provisional import tariff rate on more than 600 products related to resources, basic raw materials and key components. The country will also introduce incentive tariffs on imported high-tech products, advanced equipment for key industries, the environmental protection industry, and so on. This is not only an important method for promoting the development of foreign trade imports, but also one of the measures needed to bring about change in the foreign trade strategy model.
Analyzing the Channels for Overseas Renminbi Investment: Abstract: The use of the Renminbi for cross-border settlement has greatly accelerated its internationalization process and resulted in a rapid increase in the amount of the currency circulating outside China. As a result of cross-border business activities such as trade settlements, etc., overseas enterprises and institutions are holding increasing amounts of Renminbi, bringing about the increased demand for utilization and investment of this offshore supply of currency in order to maintain or even increase its value. Fulfilling this demand involves the design of a cross-border bidirectional circulation mechanism. Despite the fact that the current circulation mechanism is far from perfect, with the ongoing development of various overseas RMB businesses, the domestic financial markets will continue to improve and become more open to the outside world, and the channels for overseas Renminbi investment will become more diversified. This text intends to examine the existing channels and future prospects for overseas Renminbi investment, as well as its impact on capital controls.
Financial Cooperation between Guangdong, Hong Kong and Macau: Abstract: The economic cooperation between Guangdong Province and Hong Kong can be traced back to the 1980s, when Mainland China began to implement the reform and opening up policy. From the perspective of the Mainland, the principal driving force for the cooperation was rooted in the need to transfer an abundance of surplus labor and to solve the problem of the extreme shortage of savings and capital during the early stages of industrialization. From the Hong Kong side, the key reason for the cooperation was to make use of the surplus labor and cheap land resources from the Mainland to achieve strategic industrial transfers and upgrading. At present, as the Mainland is advancing with financial reform and internationalization, the financial integration and cooperation between Guangdong, Hong Kong and Macau will become a new focal point for cooperation between these three regions, and will also be the key to China’s financial development and opening up.
Financial Demand within the Three Marine Industry Sectors in China: Abstract: Many provinces in China, including Zhejiang, Guangdong and Shandong, have indicated that they intend to make every effort to develop their ocean related economies and marine industries. In accordance with the three industrial sub-sector classifications used in the calculation of gross domestic product (GDP), the marine industry can be divided into three parts, the primary marine industry, the secondary marine industry and the tertiary marine industry. Support for the marine industry by the Chinese financial industry continues to show some defects, which have been studied in only a very limited manner. This paper provides an in-depth analysis of the features of financial demand within the three marine industries as a reference for the reform of the related financial system.
Introducing Private Investment in Local Municipal Construction Projects: Abstract: Since Several Opinions on Encouraging and Guiding the Healthy Development of Investments from the Private Sector was issued in May 2010 by the State Council, corresponding measures have been introduced throughout the country, and measures designed to make full use of private investment have become a core concern at all levels of government. However, restricted by many factors, the progress of this reform is still relatively slow. In this article, a detailed analysis of specific models for introducing and using private investment for local municipal construction projects, an area which is short of funds and which lacks effective ways to attract private investment, is provided.
Promoting the Reform of Local Government Bonds in China: Abstract: In recent years, the issue of local government debt in China has grown into a major domestic and international concern, becoming a focus for research at the theoretical and policy-making levels. In fact, the proposal to grant debt autonomy to local governments through amendments to the Budget Act was again on the agenda at the end of 2011. In the long run, allowing local governments to issue bonds, similar to the municipal bonds in the Western market economy countries, is consistent with the direction of the fiscal, taxation, and financial systems. The significance of this issue will be analyzed in this article.
The Development and Characteristics of Shadow Banks in China: Abstract: Shadow banking systems are gaining increased attention from economic theorists and practitioners in China and abroad. In recent years, China has seen significant developments in the domestic shadow banking system. However, the common characteristics of shadow banks, excessive leverage and intentional avoidance of financial regulation, have brought new vulnerabilities to the financial system. The development and characteristics of China’s shadow banking system are somewhat different from those abroad, as revealed in this paper.
The Development of Small and Medium-sized City Commercial Banks: Abstract: City commercial banks have become an important component in China’s banking system. With the exception of a small number of city commercial banks that have gradually expanded in scale, the majority are still small and medium-sized banks. The development process has featured both glowing successes and typical problems and deficiencies. The healthy development of small and medium-sized city commercial banks is of great significance for financial stability in China. Key aspects of their evolution are summarized in this article.
The Direction for Reform in China’s Land Administration Policy: Abstract: The insufficient land resource supply and its prominent structural contradictions will seriously limit local economic and social development in China within a short period of time. This situation is related to the current phase of economic development and the accumulated long-term conflicts which have resulted from these contradictions, and it is also related to unreasonable planning by local governments and to the flaws in some mechanisms and systems. In the long run, the proper management of the land supply and a reasonable allocation of land resources are the key steps in assuring the healthy development of the local as well as the national economy and society. Therefore, the development plans of local governments need to be adjusted, the total land resource supply and its structure must be controlled, the system of city land utilization needs to be improved, and intensive land utilization must be promoted.
The “Going Global” Strategy of China’s Financial Institutions: Abstract: In an era when “going global” has become a national strategy in China, there is a need for financial institutions to go abroad to provide services for internationalized enterprises, and at the same time to achieve a diversified business structure. Some basic patterns have been formed as financial institutions attempt to go global, a practice which is dominated by the banking sector. Although there has been rapid development, some problems still exist, as discussed in this paper.
Integration of Industry and Finance in China: Current Developments and Problems: Abstract: At the meeting of heads of the central government-led enterprises on December 23, 2010, the State-owned Assets Supervision and Administration Commission (SASAC) clearly stated for the first time that the integration of industry and finance for central government-led enterprises should be carried out under the premise of risk control. It also suggested that to foster large enterprise groups that would have international competitiveness, the importance and necessity of integration of industry and finance must be fully understood. In this regard, it is important to study the current developments and problems in this area.
China's Interbank Markets: Analysis of Investors and Regulations: Abstract: As an important part of the financial market system in China, the interbank market plays the role of both a currency market and a capital market. Although the investor structure has been optimized in recent years, there are still many problems which need to be solved in terms of diversification, internationalization, and professionalization. Developing regulations for investors requires taking lessons from foreign experiences and accounting for current conditions, from which the basic principles for laws, institutions, patterns, etc. can be established. In this paper, the relevant situation of the interbank market in China is analyzed.
Inherent Problems in the Monetary Policy: Abstract: In recent years, with the development of China's financial system, the effect of monetary policy has attracted extensive attention. The public have placed high hopes on the effect of monetary policy, hoping that it will solve multiple problems in areas such as the economic structure, social fairness and asset bubbles. Unlike developed countries, China's monetary policy has its own characteristics, which will be analyzed and discussed thoroughly in this report.
Policies and Prospects for the New Energy Industry: Abstract: As the global climate changes and restraints on the energy resource environment tighten the Chinese government has increased the focus on the development of the new energy industry. It has also formulated strategic plans for the future development of the industry and given proactive policy support. Whether seen from the perspective of the policy environment, resource endowments, or especially the domestic market demand, the prospects for the new energy industry in China remain promising, but it is necessary to guard against potential challenges.
Prospects for the Implementation of the Fiscal Policy: Abstract: China faces many obstacles in effectively implementing its fiscal policy. These obstacles include the high growth in tax revenue, the high macro-tax burden, problems with state-owned capital, the financial expenditure structure, land finance issues, and local financing platforms. Faced with more constraints and pressures, the Chinese government will focus on changing many areas of fiscal policy in order to meet the needs of both the market economy and society.
An Analysis of Real Estate Market Regulation: Abstract: China has recently strengthened regulations in the domestic real estate market, arousing escalating levels of public controversy. The real estate regulations not only affect the country's economic growth prospects and social stability, but have also had a profound impact on the global economy. This report provides an in-depth analysis of the impetus, strategy and prospects for the recent real estate regulations.
RMB Exchange Rate Policies —during the 12th Five-Year Plan Period: Abstract: The RMB exchange rate is currently a major focus for individuals at home and abroad, but many do not fully understand that the formation of China's exchange rate policies depend on several factors which embody the different policy directions of the central government and the monetary authorities. On the basis of a systematic investigation of these factors, prospects for RMB exchange rate reform during the 12th Five-Year Plan period are analyzed and forecast in this report.
Policies for Structural Adjustment in the Iron and Steel Industry —during the 12th Five-Year Plan Period: Abstract: During the Twelfth Five-Year Plan period (2011 to 2015), China's iron and steel industry will focus on structural adjustment and optimizing regional distribution, clean production as well as energy conservation and emission reductions, elimination of outdated production capacity, alliances and restructuring, technical innovation, and the development of an industrial chain with emphasis on strengthening the capability for guaranteed resources. It is expected that the majority of existing industrial policies will continue; however, efforts to implement policies will be strengthened. Meanwhile, it is also expected that some new industrial policies will be launched.
Transformation of Foreign Exchange Reserves Management: Abstract: China's substantial foreign exchange reserves have attracted more and more attention at home and abroad. Foreigners believe that the scale of the reserves reflect China's strong economic strength, while people in China think that they are gradually becoming a problem. Whatever happens, the consensus is that China's foreign exchange reserves system needs reform. This report presents an analysis from several new angles.
Financial Policies for the “Going Global” Strategy: Abstract: It has become commonly accepted that domestic enterprises will expand globally. In the past, it was emphasized that many policies, especially supportive financial policies, were needed for the “going global” strategy, but no substantial progress has been made. During the 12th Five-Year Program for China's Economic and Social Development (2011-2015), it is expected that financial reform will be promoted and supportive financial policies for the “going global” strategy will have greater importance.
An Analysis of Hot Money: Abstract: There are many measurement methods and considerable differences in official and unofficial conceptions of hot money; however, it is generally acknowledged that hot money will have a negative impact on China's economy and financial system, which cannot be ignored. The flow of overseas hot money into China is caused by various factors and it most often happens through illegal channels. Therefore, dealing with this problem will be a focus of the policies related to further opening the financial markets by the Chinese government.
Development of the High-End Equipment Manufacturing Industry: Abstract: In recent years, China's equipment manufacturing industry has maintained an upward development trend with ongoing structural optimization. The high-end equipment manufacturing industry has become one of the seven strategic emerging industries that China will endeavor to cultivate and develop in the future with the intent of transforming and upgrading the entire industry. With the improvement in consumption levels and the adjustment of energy structures, China's equipment manufacturing industry will have good market prospects, and more of the high-end market share will be occupied by relying on technological innovation.
Excess Currency Issuance and Inflation: Abstract: In China, the monetization ratio (ratio of money to GDP) has been high for quite a number of years but price increases have been relatively mild. The price rise for food products is the major factor for this round of inflation; another factor is the price fluctuations for international resources; and a more profound cause is the imperfect and stagnating domestic market reforms. Therefore, to some degree, the fundamental cure for inflation will be determined by the size and speed of the transformation of the domestic resource market from the planned economy to the market economy.
Systemic Risks in the Bond Market: Abstract: In 2011, the central bank of China will switch its monetary policy from “moderately easy” to “prudent”, returning to the normal situation. In this context, and supposing that the economic and financial reality is coupled with other deflationary policies introduced by the central bank, the corresponding outcome will be a decline in market liquidity and a potential rise in systemic risks in the bond market. Currently, as a major part of the Chinese capital market, the bond market has a wide sphere of influence and significant importance for financial stability.
The “Going Global” Strategy for Large Banks: Abstract: Since China has continued to deepen the reform and opening up, leading to an increase in its economic stature which has allowed enterprises to accelerate their pace of going global. These conditions have created a good environment for the large Chinese banks to follow in turn with their own international expansion. In this report, by taking the large banks as a sample, and based on a study of their current overseas location choices, the reasons for their placement decisions are analyzed, and then the regional strategies for future international expansion of the Chinese banking sector are examined.
The Progress in Developing the Oil Reserve System: Abstract: At present, China has built a two-level oil reserve system with the national strategic oil reserves as the main component and commercial reserves held by state-owned oil enterprises as the supplementary part, with a total oil reserve capacity of more than 30 days. By 2020, China will establish a four-level oil reserve system with national strategic oil reserves, local oil reserves, commercial oil reserves held by state-owned oil enterprises like PetroChina and commercial oil reserves held by small and medium-sized companies. The goal is to guarantee a 90 day supply of oil.
The Future Trend of the Wind Power Industry: Abstract: In the next five years, it is very likely that the development of China's wind power industry will exhibit the following trends: 1. Installed wind power capacity will grow quickly. 2. Excess production capacity will consolidate. 3. Greater efforts will be made to strengthen the development of the international market. 4. Diversified production and marketing will become the mainstream pattern for industrial development. 5. Wind power development will be transformed to the dual development model of sea-land wind power from strictly land-based.
The Financial Regulatory System and Orientation Reforms: Abstract: The reform of the financial regulatory system is not only a hot topic for discussion in developed countries, but also a focus in China and it is the emphasis of financial reform during the 12th Five-Year Plan period. At present, various issues have emerged in China's financial regulatory system and domestic disputes have led to uncertainties about the orientation of reform. However, it is anticipated that there will be changes in regulatory legislation, bodies, methods and policies in the future.
Main Paths for Promoting Internationalization of the Renminbi: Abstract: Chinese authorities have shown their determination to promote the internationalization of the Renminbi. Although the Chinese government has not established clear goals and measures for planning and developing this process, as it did for many of the other reforms in China, it is still possible to explore the main paths leading to the eventual internationalization of the Renminbi.
The Current Situation and Existing Problems for Private Capital: Abstract: In the future private capital will have even broader development prospects and it will be necessary for the government to employ private capital to complete many of their policy goals. The significance of and the factors influencing private capital are increasingly complicated and hard to define, which increases the difficulty in implementing policy and conducting empirical analysis. While deeply affecting China's development, private capital will also increase uncertainties in the economic society.
Development Policies for the Strategic Emerging Industries: Abstract: China already has favorable resource conditions and an adequate industrial foundation for developing certain strategic emerging industries. The government will promote the development of these industries through planning, guiding, funding, encouraging innovation, cultivating markets, and international cooperation.
Development Prospects for the Coal Chemical Industry: Abstract: As international oil prices fluctuate, the demand for alternative chemical raw materials and alternative energy is becoming more and more urgent, and energy conservation and emission reduction have become a priority. Therefore, the utilization of clean coal has been included in China's development plan for its emerging energy industry. However, the coal chemical industry is also facing issues such as over-development and excess capacity in some traditional fields, and the future development prospects for the new-type of coal chemical industry are receiving the most attention.
Local Financing Platforms and the Capital Adequacy Ratio of Banks in China: Abstract: Among a series of supervision policies aiming at cleaning up and standardizing loans from local government financing platforms in the last two years, increasing the platform loan risk weight has had a direct effect on the capital adequacy ratios of banks. This report evaluates the influence of the increase on the capital adequacy ratios of China’s major commercial banks and analyzes the possible countermeasures that they could take.
The Adjustment Policies for China’s Rare Earth Industry: Abstract: China is a country with the richest rare earth deposits, one of the important non-renewable strategic resources. But there are problems with the development of this resource, leading to environmental pollution and other issues. The State Council of China held special executive meetings to discuss and plan polices and measures to encourage the sustainable and healthy development of the industry. The emphasis is on having a sustainable and healthy rare earth industry with rational development, orderly production, efficient utilization, technological advances and an intensive development pattern in approximately five years.
Future Prospects for Capital Account Control in China: Abstract: The internationalization of the RMB and the opening of the capital account complement and promote each other. This report intends to analyze and summarize the current situation regarding foreign exchange control in four areas: management of foreign debt, direct investment, securities transactions, and liquidity of individual foreign exchange assets under China’s capital account. In addition, by examining the background for promoting the internationalization of the RMB, future prospects for opening the capital account will be examined.
Financing Difficulties for China’s Small and Medium-sized Enterprises: Abstract: The financing difficulties for small and medium-sized enterprises have received attention from both the public and the government, which has stressed that the problem should be a key concern for policy makers. In spite of this, these difficulties have not been solved; in fact, to some extent, they have intensified. The reasons for these problems are analyzed in this report, and the thoughts on corresponding policy decisions are also offered, from the view of the government as well as from the banks.
Probing into China’s Rural Social Security System Reform: Abstract: Establishing and improving a social security system covering urban and rural residents is not only an important task aiming at protecting and improving livelihood, and enhancing social construction during the period of the Twelfth Five-Year Plan, but also an important systemic construction enabling the sharing of development results among the people. In this process, it is of particular importance to complete the reform of the rural social security system. This report comprehensively takes into account the background, current status and problems of the development of the rural social security system, and proposes ideas and concepts for a follow-up to the reform.
Positioning and Prospect Analysis of “CIC II”: Abstract: Recently, the State-owned Assets Supervision and Administration Commission (SASAC) formally established the China Reform Holdings Corporation Ltd., or “CIC (China Investment Corporation) II” which implemented the recent major reform of state-owned asset management. Although SASAC kept a low profile when carrying out this pilot reform, it still caused widespread concern in the market. Disagreements about the positioning and prospects of China Reform Holdings Corporation Ltd. arose from all parties. The background and expectations of the China Reform Holdings Corporation Ltd. will be objectively analyzed and discussed in this report.
Analysis on China’s Direct Investment in Europe: Abstract: China’s direct investment in Europe has been speeding up during the recent two years, and attracted wide attention of countries around the world. This report makes a systematic description of China’s direct investment in Europe in recent years and resorts to official internal sampling survey data to lay out how Chinese companies should deal with and understand direct investment in Europe and looks forward to the related prospects.
China’s Strategy to Promote the Construction of an Overseas RMB Market: Abstract: Since the 1970s, the development of offshore financial markets has changed the international financial system and also brought about far-reaching impacts in relevant countries. At present, China has a new proposition for building RMB offshore markets and offshore centers. The background of this major challenge and the major theoretical disputes at home are analyzed and relevant ideas and suggestions are also put forward in this article.
Banking Operating Strategies in the Case of Tightening Monetary Policy: Abstract: Since the beginning of 2011, the credit quota for China’s banking industry has been controlled more stringently, so the original business model of compensating for reduced interest rates by increasing the number of loans is no longer sustainable. As a result, related banking operating strategies have been gradually transformed. Banks have started tilting the limited credit quota toward the high-yield areas through increased competition for deposits, and making use of financial products to increase intermediary business income in order to consolidate the scale of their earnings and achieve steady growth.
The Impact of Renminbi Appreciation on Financial Markets: Abstract: Through an analysis of the background of Renminbi appreciation and its impact on the international and domestic financial markets, this text argues that China must draw on the experience of Japan when formulating Renminbi exchange rate policies and advancing Renminbi internationalization, and then goes on to present several countermeasures.
Problems in China’s New Energy Industry: Abstract: The new energy industry is one of the seven strategic new industries that have been selected for quick cultivation and development by the Chinese government. In recent years, the new energy industry, typified by wind energy, solar energy and bioenergy, has developed rapidly in China. But there are problems such as the unbalanced and uncoordinated development of upstream and downstream industrial chains, the low level of core technology, and disorder in the energy market.
The International Operations of China’s Key Iron and Steel Enterprises: Abstract: Stimulated by many factors including the changing domestic and international market environment and changes in industrial policy guidance, in recent years China’s key iron and steel enterprises have intensified their international operations and displayed new characteristics such as paying equal attention to obtaining overseas iron ore resources and investing to establish overseas factories, and picking increasingly diverse investment objectives and more flexible investment methods. In the next three to five years, the international operations of these enterprises will enter a new stage of expanding their investment scale, widening their investment areas, developing more varied investment methods and selecting more diversified investment objectives.
China’s Fiscal Sustainability and Financial Stability: Abstract: The method of analysis of fiscal sustainability and potential financial risks are discussed in this paper, and a comprehensive analysis of China’s fiscal sustainability is also conducted from the perspective of levels of indebtedness, financial revenues, and expenditure and assets. On this basis, an in-depth analysis of the factors affecting China’s financial stability is conducted, such as the implicit liabilities of the central and local governments, coordination difficulties existing in fiscal and monetary policies, and financial paternalism.
The Control Policies of China’s Aluminum Industry: Abstract:Along with the expansion of the size of the domestic market and the rapid development of its aluminum industry, China has become one of the major powers in industrial aluminum production worldwide. However, at present, the aluminum industry in China is confronted with several serious problems, such as overcapacity, an irrational industrial structure, high dependence on foreign raw materials, a lack of independent innovation capacity, international trade frictions, etc. During the period of the Twelfth Five-Year Plan, taking into account both the domestic and international conditions regarding energy, resources, environment, etc., the Chinese government will stress the capability to meet domestic market demand, the utilization of both domestic and foreign mineral resources, the development of a circular economy, controlling the unlimited expansion of smelting capacity, reducing environmental pollution, reinforcing independent innovation capacity, and promoting industrial restructuring and upgrading.
The Income Distribution Problems of Chinese Residents: Abstract: In recent years, there have been two major problems with residential income distribution in China. First, the proportion of resident income in national income has declined noticeably. Second, the gap in income distribution has widened considerably. The biggest negative impact of these two facts is that they may cause a serious shortage in consumption demand and a serious imbalance between the growth of investment and consumption, possibly causing the Chinese economy to slip into the “middle-income trap”. There are three major approaches to solve the problems with income distribution in China. First, the existing development model must be changed in order to increase employment and income and narrow the income gap. Second, the reform of the income distribution system must be accelerated, a process which mainly requires reducing the rate of individual income tax and collecting property tax. Third, the public expenditure burden for residents should be relieved and tax reductions for SMEs, especially those in the service industry, should be introduced.
The Interest Spreads for Large, Small, and Medium Sized Chinese Banks: Abstract: In recent years, the deposit-loan interest rate spreads for China’s commercial banks have been gradually narrowing, posing an unavoidable challenge regarding the development and operation of these institutions. According to the data, the deposit and loan interest spreads are more desirable for large banks compared with small and medium banks, mainly due to their greater power in terms of setting lending rates and their relatively broad customer base. Thus the narrowing spreads imply a greater challenge for small and medium banks.
The Development of Strategic Emerging Industries in China: Abstract: During the 12th Five-Year Plan period, China has proposed developing seven strategic emerging industries after the plan for adjusting and reinvigorating ten major industries has been completed. This is an important move for continuing to promote the adjustment of the industrial structure. Developing strategic emerging industries will benefit the country by helping it to recover from the impact of the international financial crisis while keeping focus on the level of long-term development. This report will thoroughly analyze the relevant conditions related to the development of strategic emerging industries in China.
Building a RMB Offshore Center in Hong Kong: Abstract: At present, the issue of building a RMB offshore center in Hong Kong has attracted wide attention at home and abroad, which not only affects the future economic and social prosperity and vitality in Hong Kong, but also plays a key role in realizing successful internationalization of RMB. It is believed that Hong Kong not only needs to further introduce a wide variety of RMB financial products, but also needs to conduct effective control on relevant risks in order to become a really sound RMB offshore center.