The Core Mission for Financial Institutions in the Next Stage as Seen from the Decision (AI Translation)
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专栏作家 王剑
Columnist Wang Jian
7月21日，新华社受权发布《中共中央关于进一步全面深化改革 推进中国式现代化的决定》（以下简称“《决定》”）全文，锚定2035年基本实现社会主义现代化目标，重点部署未来五年的重大改革举措。《决定》全文分为三大板块，由15部分60条300多项改革组成，本文将重点解读《决定》在经济金融改革方面释放的重要信号。
On July 21, Xinhua News Agency released the full text of the "Decision of the Central Committee of the Communist Party of China on Further Deepening Reforms and Promoting Chinese-style Modernization" (hereinafter referred to as the "Decision"). This Decision establishes the goal of basically realizing socialist modernization by 2035 and focuses on major reform initiatives for the next five years. The full text of the Decision is divided into three major sections, comprising 15 parts, 60 clauses, and over 300 specific reforms. This article will specifically analyze the important signals regarding economic and financial reforms outlined in the Decision.
本次决定稿的内容摆布，特别注重发挥经济体制改革牵引作用。第一个主要任务，完善有利于推动高质量发展的体制机制，意味着要处理好政府和市场关系的核心问题。具体举措包括但不限于着眼提升国企核心竞争力，推进国有经济布局优化和结构调整，推动国有资本和国有企业做强做优做大；着眼推动非公有制经济发展，提出制定民营经济促进法，加强产权执法司法保护等。第二个主要任务，塑造发展新动能新优势，意味着要促进新质生产力发展，围绕发展以高技术、高效能、高质量为特征的生产力，提出加强新领域新赛道制度供给，建立未来产业投入增长机制，以国家标准提升引领传统产业优化升级，促进各类先进生产要素向发展新质生产力集聚。
This decision draft particularly emphasizes leveraging economic system reforms. The first major task is to improve mechanisms conducive to promoting high-quality development, which means addressing the core issue of the government-market relationship. Specific measures include, but are not limited to, enhancing the core competitiveness of state-owned enterprises (SOEs), optimizing and adjusting the layout and structure of the state economy, and strengthening, enhancing, and expanding state capital and SOEs. In terms of promoting the development of the non-public economy, it proposes drafting a Law on Promoting Private Economy and strengthening the enforcement and judicial protection of property rights. The second major task is to shape new development drivers and advantages, which means fostering the development of new productive forces characterized by high technology, high efficiency, and high quality. It proposes strengthening the institutional supply in new fields and new tracks, establishing a growth mechanism for investment in future industries, elevating national standards to guide the optimization and upgrading of traditional industries, and promoting the aggregation of various advanced production factors towards the development of new productive forces.
纵观全文，我们认为本次《决定》的改革重心主要聚焦在三大领域，分别围绕着财税、科技和金融。正好对应去年新设立的几个高规格委员会。其中，财税体制改革，重点是理顺央地关系；科技机制体制改革，重点是促进新质生产力发展；金融体制改革，重点是发挥金融的功能属性。
Throughout the entire text, we believe the focus of this "Decision" is primarily centered on three major areas: fiscal and taxation, science and technology, and finance. This precisely corresponds to several high-level committees established last year. In terms of fiscal and taxation system reform, the emphasis is on streamlining the relationship between central and local governments; for science and technology system reform, the focus is on promoting the development of new productive forces; and for financial system reform, the aim is to leverage the functional attributes of finance.
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- The Decision aims to achieve basic socialist modernization by 2035 with focus on reforms in fiscal, taxation, science, technology, and financial systems.
- It emphasizes enhancing state-owned enterprises, drafting a Law on Promoting Private Economy, and strengthening property rights protection.
- Core financial reforms include improving financial institution governance, enhancing the capital market's functionality, and perfecting the financial regulatory system to prevent systemic risks.
The "Decision" of the Central Committee of the Communist Party of China aims to achieve socialist modernization by 2035, targeting major reforms over the next five years, focusing heavily on economic and financial reforms [para. 1]. It emphasizes improving mechanisms for development, with efforts to enhance the core competitiveness of state-owned enterprises (SOEs), streamline the state economy's structure, and strengthen the non-public economy [para. 2]. Additionally, the Decision aims to foster new development drivers characterized by high technology, high efficiency, and high quality, promoting investment in future industries [para. 3].
The focus areas are fiscal and taxation, science and technology, and finance, aligned with several high-level committees formed last year [para. 4]. Fiscal and taxation reforms will clarify the central-local government relationship, while scientific and technological reforms will develop new productive forces. Financial reforms are more auxiliary, aiming to serve the real economy and align funding with emerging industries [para. 5].
Three core principles for financial reforms are identified: enhancing financial institutions' governance and services, improving capital market functions to address deep-seated issues, and perfecting the financial regulatory system [para. 6]. Specific plans include formulating financial laws, improving the central banking system, and strengthening the capital market to better match investment with financing [para. 7]. Addressing the right financial positioning, the Decision focuses on serving the real economy, refining financial institutions' governance, developing fintech, green and digital finance, and improving services for major strategies [para. 8]. Capital market reforms aim to tackle issues affecting market stability and functionality, while regulatory reforms will incorporate all activities under legal oversight, enhancing coordination between regulators to prevent systemic risks [para. 10].
Overall, the Decision represents a strategic blueprint to deepen financial system reforms, aligning financial development with economic modernization while strengthening regulatory frameworks [para. 12].
Sections specific to banking, securities, funds, and insurance outline targeted initiatives:
**Banks**: There is a dynamic shift in banking credit focus towards high-quality growth sectors, especially technology, with credit support for tech-based and high-tech SMEs growing significantly [para. 14]. Future credit policies will prioritize technology, green finance, inclusive finance, pension finance, and digital finance, aligning with directives from last year's Central Financial Work Conference [para. 16]. Banks are also expected to support new productive capacities through direct equity investments and wealth management funds [para. 19].
**Securities**: Improving the quality of listed companies by focusing on new, high-quality productive forces is a priority. Enhanced supervision and delisting systems aim to raise investor confidence. Reforms will also emphasize better dividends and protection mechanisms for investors, addressing the imbalance between financing and investment [para. 22][para. 23]. Expanding direct financing through diversified equity financing and tiered bond markets is crucial, along with promoting stabilities like patient capital to decrease market volatility [para. 25][para. 26].
**Funds**: Public mutual funds will play a key role in supporting technology finance and improving residents' income through dividends and investment opportunities in emerging fields like semiconductors and AI. They will also contribute to green and retirement finance, with significant involvement in ESG investments and managing substantial pension funds [para. 27][para. 28].
**Insurance**: Insurance companies will adapt their product offerings and asset allocations to support new productive forces, providing comprehensive coverage for tech enterprises. The insurance sector also aims to address long-term elderly care needs and support national scientific tasks through diversified insurance products. On the asset side, substantial insurance funds will contribute long-term investments to strategic emerging industries, aiding in technological advancements and economic transformation [para. 30][para. 32].
In summary, the Decision sets a comprehensive strategy for achieving socialist modernization by 2035 through fundamental economic and financial reforms that align the financial sector more closely with real economy needs, emphasizing robust governance, regulatory improvements, and targeted sectoral support.
- End of 2022：
- The amount invested in private equity funds by insurance companies exceeded 520 billion yuan, representing 28% of equity investments for the year.
- End of June 2023：
- The number of participants in China’s long-term care system reached 170 million, with over 2 million people receiving benefits and cumulative fund expenditures amounting to approximately 65 billion yuan.
- After 2023：
- Several high-level committees related to fiscal, taxation, science, technology, and financial system reform were established.
- End of the first quarter of 2024：
- The balance of domestic and foreign currency loans to tech-based small and medium-sized enterprises reached ¥2.7 trillion, an increase of 20.4% year-on-year.
- End of the first quarter of 2024：
- Loans to high-tech enterprises reached ¥14.84 trillion, an increase of 13.6% year-on-year.
- End of the first quarter of 2024：
- The total investment of China’s insurance industry reached 29.9 trillion yuan, with long-term equity investments amounting to 2.4 trillion yuan.
- July 21, 2024：
- Xinhua News Agency released the full text of the "Decision of the Central Committee of the Communist Party of China on Further Deepening Reforms and Promoting Chinese-style Modernization".
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