visimoney
TLDR:
- China’s financial sector urged to support real economy and innovation
- Warning against speculative activities and capital idling in the banking sector
In a recent commentary by People’s Daily, China’s financial sector, valued at US$63 trillion, was urged to focus on supporting the real economy and refrain from “fake financial innovation.” The warning against capital idling and speculative activities comes as regulators tighten rules governing quant trading and address concerns over the fragility of the financial system due to local debt, property slump, and stock market chaos. The article mainly pointed to risks in China’s shadow banking industry and emphasized the need for financial resources to serve the wider economy. China’s leadership is prioritizing function over profitability, with an emphasis on supporting scientific and technological innovation and industrial policies. The goal is for China to become a financial superpower with its own characteristics, as President Xi Jinping has ordered.
Financial institutions are being called to avoid allowing money to circulate within the sector for arbitrage purposes and focus on supporting technological innovation, advanced manufacturing, green development, and small enterprises. The crackdown on speculative activities is evident through recent actions such as banning a major quant fund from trading for three days to stabilize the market. China is aiming to regulate all financial activities while also opening up to the global market to become a financial powerhouse. Despite facing challenges such as an unbalanced financial institution structure and a sluggish stock market, China is determined to enhance its financial sector integrity and serve the real economy.
