To release these signals and positive news, China's top financial regulators spoke out collectively in Shanghai
On June 19, at the 2024 Lujiazui Forum, the speeches of the leaders of the “one bank, one bureau, and one commission” once again attracted the attention of the entire financial market. They proactively responded to market hot spots and concerns, and released a large number of signals and positive news to the outside world.
Five years ago, the Science and Technology Innovation Board was officially launched at the Lujiazui Forum. Five years later, at the Lujiazui Forum, this experimental field of China's capital market announced reforms again.
Wu Qing, Chairman of the China Securities Regulatory Commission and co-rotating chairman of the forum, mentioned in his speech that the CSRC will issue eight measures to deepen the reform of the Science and Technology Innovation Board, further highlight the "hard technology" characteristics of the Science and Technology Innovation Board, and improve the issuance and underwriting, mergers and acquisitions, equity incentives, and trading systems and mechanisms to better serve scientific and technological innovation and the development of new quality productivity.
In the afternoon of the same day, the China Securities Regulatory Commission issued the "Eight Measures on Deepening the Reform of the Science and Technology Innovation Board to Serve Technological Innovation and the Development of New Productivity", and made corresponding arrangements to address issues such as high-priced over-subscription of new stock issuances, active M&A and restructuring markets, and strengthened supervision of listed companies, which have been the focus of market response.
At the forum, the Shanghai Regional Center of the International Monetary Fund was officially launched. At the beginning of his speech, Pan Gongsheng, Governor of the People's Bank of China, pointed out that supporting the construction of Shanghai as an international financial center and encouraging foreign financial institutions and international financial organizations to settle in Shanghai are important tasks for the People's Bank of China to implement the important instructions of General Secretary Xi Jinping and the decisions and arrangements of the Party Central Committee.
He believes that the IMF is an important international financial institution in the world. He believes that the Shanghai Regional Center will deepen the cooperation between the IMF and China, promote and enhance the exchange and coordination of macroeconomic policies among countries in the Asia-Pacific region, and promote the maintenance of global and regional financial stability.
"Shanghai has always been at the forefront of the country in terms of financial reform and opening up." Li Yunze, director of the State Financial Supervision and Administration Bureau, also said: "In the future, we will promote more financial opening-up measures to be piloted in Shanghai, fully support the construction of Shanghai as an international financial center and the integrated development of the Yangtze River Delta, and give full play to Shanghai's leading and exemplary role in promoting China's modernization."
He revealed that in the near future, the Shanghai Municipal People's Government will issue implementation opinions on accelerating the construction of Shanghai International Reinsurance Center. At the same time, actively explore the pilot investment of insurance funds in gold contracts and related products of Shanghai Gold Exchange, relax the restrictions on non-resident merger and acquisition loans in Lingang New Area, encourage China Insurance Investment Company to better play the role of long-term investment of insurance funds in Shanghai, and support more foreign financial institutions to land in Shanghai.
Zhu Hexin, Deputy Governor of the People's Bank of China and Director of the State Administration of Foreign Exchange, also agreed to "give full play to Shanghai's leading role". He said that Shanghai will be encouraged to explore a "more honest, more convenient" foreign exchange management model based on the high-level pilot of cross-border trade and investment, the reform of bank foreign exchange business and due diligence exemption policies. Shanghai's high-level opening-up policies will be replicated and promoted to the Yangtze River Delta and even the whole country in an orderly manner, supporting the integrated development of the Yangtze River Delta to achieve greater breakthroughs and create new advantages of a higher level of open economy.
New quality productivity was also emphasized in the speeches of regulators.
"Serving the development of new quality productivity is the capital market's unshirkable responsibility and a rare opportunity." Wu Qing made it clear that the capital market must actively embrace the development of new quality productivity.
He introduced that in the next step of work, the first thing is to improve the coverage and accuracy of multi-level market services. The development of new quality productivity not only includes cultivating and strengthening emerging industries, planning and building future industries, but also includes the transformation and upgrading of traditional industries. The top priority is to conduct in-depth research on the characteristics and development laws of relevant enterprises and their needs in investment and financing, incentives and constraints, corporate governance, etc., and to enrich the tools, products and services of the capital market in a targeted manner.
Second, we need to strengthen patient capital. Technological innovation is the core element of developing new productivity. Technological innovation enterprises usually have the characteristics of high investment, long cycle, and great operating uncertainty, which are highly consistent with patient capital that adheres to "long-termism". The China Securities Regulatory Commission will work with relevant parties to actively create conditions to attract more medium- and long-term funds to enter the capital market, optimize support policies around the entire chain of venture capital and private equity investment "raising funds, investing, managing and exiting", guide better investment in early, small and hard technology, and promote a virtuous cycle of "technology-industry-finance".
Third, we need to solve the problem of inclusive innovation from the perspective of institutional mechanisms and concepts. Innovation is essentially an exploration of unknown areas. Only by creating a good atmosphere that encourages innovation and tolerates failure can we promote the vigorous development of new quality productivity. This requires all parties to build consensus and clear bottlenecks.
"The prominent feature of new productivity is innovation." Li Yunze said that the insurance industry will be promoted to achieve high-level scientific and technological self-reliance and self-improvement, and accelerate the improvement of the insurance product system covering the entire life cycle of science and technology enterprises. Improve the "first batch, first batch" insurance compensation policy mechanism to better play the role of integrated circuit co-insurance. Increase the support of insurance funds for strategic emerging industries, advanced manufacturing, new infrastructure and venture capital. Improve the green financial evaluation mechanism, promote the "willing to insure" of new energy vehicles, and encourage insurance institutions to strengthen risk protection and financial support for green industries and green consumption.
Since the beginning of this year, global inflation has cooled down from its high level, but it is still sticky. Some central banks, such as the European Central Bank, have begun to cut interest rates, and some central banks are still observing and expect to cut interest rates later this year, but generally maintain a high interest rate and restrictive monetary policy stance. Pan Gongsheng said: "China's situation is different. The monetary policy stance is supportive, providing financial support for the continued recovery of the economy. We will continue to adhere to a supportive monetary policy stance and strengthen counter-cyclical and cross-cyclical adjustments."
He particularly emphasized that in regulation, we will focus on grasping and handling three aspects of the relationship: First, the relationship between the short-term and the long-term. Maintaining price stability and promoting a moderate recovery in prices will be an important consideration, and policy tools such as interest rates and deposit reserve ratios will be used flexibly, while maintaining policy focus and not expanding or contracting. Second, the relationship between stabilizing growth and preventing risks. We will coordinate and balance the relationship between supporting the growth of the real economy and maintaining the health of financial institutions themselves, and insist on preventing and resolving financial risks in promoting high-quality economic development. Third, the relationship between internal and external. We will mainly consider the need for regulation of the domestic economic and financial situation, taking into account the spillover effects of the economic and monetary policy cycles of other economies.
Talking about further improving the market-oriented interest rate regulation mechanism, Pan Gongsheng said: "In recent years, we have continued to promote interest rate marketization reform and have basically established an interest rate formation, regulation and transmission mechanism. From the central bank's policy interest rate to the market benchmark interest rate, and then to various financial market interest rates, they can generally be transmitted smoothly."
But he also frankly admitted that there is still room for improvement. For example, there are still many varieties of the central bank's policy interest rates, and the interest rate relationship between different monetary policy tools is also relatively complex. In the future, it may be considered to make a certain short-term operating interest rate of the central bank the main policy interest rate. At present, the 7-day reverse repurchase operating interest rate has basically assumed this function. The interest rates of monetary policy tools of other maturities can dilute the color of the policy interest rate and gradually straighten out the transmission relationship from short to long. At the same time, continue to reform and improve the loan market quotation rate, focus on improving the quality of LPR quotations to more truly reflect the interest rate level of the loan market in response to the problem that some quotation rates deviate significantly from the actual most favorable customer interest rate.
