On October 20, Yin Yong, Deputy Secretary of the CPC Beijing Municipal Committee and Mayor of Beijing, attended events of the Annual Conference of Financial Street Forum 2024, and delivered an address on advancing five areas in the financial sector. He emphasized the foundational mission of finance is to support high-quality socio-economic development. Furthermore, he underscored the importance of implementing the decisions and arrangements of the CPC Central Committee, prioritizing Beijing’s strategic positioning as the capital, and staying committed to the financial development path with Chinese characteristics. To enhance the financial sector’s role in supporting and promoting the capital’s development in the new era, it is crucial to deepen reforms and innovation, focus on key priorities, and take systematic actions in five areas: technology finance, green finance, inclusive finance, pension finance, and digital finance.
Yin said that the initiative on promoting these five areas was first introduced at the Central Financial Work Conference, and later reiterated during the Third Plenary Session of the 20th CPC Central Committee. These five areas reflect the characteristics of current socio-economic development as well as the evolving laws of financial development in the new era. By working on the five areas systematically, the financial sector can better serve socio-economic growth and the real economy. Achieving success in these areas requires a firm focus on key priorities and targeted efforts.
The key to technology finance is improving the supply of high-risk investment. Due to the high level of uncertainties in technological innovation, tech financing usually comes with high risks and high return potential. However, in our financial system, investment with a high risk appetite is often constrained due to regulatory requirements, the risk tolerance of investors, and social and cultural influences, leading to inadequate financing for the technology sector. Yin underscored some key measures to address this issue, including deepening supply-side structural reform in the financial sector, encouraging financial institutions to improve incentive and constraint mechanisms, and making full use of equity, debt, and insurance instruments. He also emphasized efforts to support the high-quality development of the Beijing Stock Exchange, leverage the counter-cyclical role of government investment funds, and provide full-lifecycle financial services to tech firms to foster a virtuous “technology-industry-finance” cycle.
On green finance, Yin said that the key lies in quantifying and internalizing environmental externalities. The key barrier to green development is the inability to prevent producers of negative externalities from evading their costs while rewarding those who generate positive externalities. There is also a lack of effective monetary metrics to gauge the value of externalities, such as the social cost of pollution, and the positive effect of emissions reduction. Efforts should be made to improve the green policy, standards, and product systems, promote the development of the national voluntary greenhouse gas emissions reduction trading market, and support the research, investment, and application of clean energy. These aim to drive the all-round green transition of the economy and society, catalyze ecological conservation and achieve the goals of carbon peaking and neutrality.
On inclusive finance, Yin said that the primary barrier is the information asymmetry that hampers financing for micro, small, and medium enterprises (MSMEs). The lack of standardized information disclosure mechanisms makes it challenging for financial institutions to accurately evaluate the financial health, growth potential, and market prospects of the large number of MSMEs. In addition, the asset-light nature of MSMEs means that they often lack collateral to access affordable financing. To address such challenges, emphasis should be placed on harnessing big data and the role of the Beijing International Data Exchange, and collect all possible data of MSMEs in their social and economic activities, so as to better evaluate their growth potential and repayment ability. Strengthening risk-sharing mechanisms for inclusive finance will further enhance the inclusiveness and accessibility of financial services.
On pension finance, Yin said that the key lies in offering long-horizon financial solutions to meet the demand. Long horizons often come with additional uncertainties and complexity for financial management and services. Furthermore, pension finance must not only support the elderly but also assist the younger generations in preparing for retirement. Currently, there is significant room to expand services for both groups. Yin proposed concentrating on their diverse needs by fostering innovation in financial products and services, developing third-pillar pension programs, and creating a comprehensive wealth management system. Efforts should also be made to connect the elderly care industry with financial services and boost the health industry, elderly care sector, and silver economy.
On digital finance, Yin highlighted the importance of balancing the relationship between the government and market, as well as innovation and regulation. While digitalization has accelerated the development of sectors including finance and boosted social progress, it also brings challenges to financial regulation and stability. Beijing, strong in both digital economy and financial development, has a regulatory foundation and the conditions to adapt to evolving technologies. Yin encouraged financial institutions to accelerate digital transformation and promote the use of digital RMB, thereby delivering more convenient and competitive financial services. He also underscored the need to adopt a wide range of regulatory tools for fintech innovation and strengthen digital oversight, so as to facilitate financial innovation and development while guarding against risks.
(Written by Yang Qi)
