News & Reports News Year 2012 July, 2012 Financial forum told of sectors for reform

Financial forum told of sectors for reform

CHINA is to deepen reform in the currency, insurance, banking and securities sectors as the country seeks to rebalance and maintain economic growth, top financial authorities said yesterday.

"We will forcefully push ahead financial reforms and innovations to promote cohesive development in the economy and the financial industry," Zhou Xiaochuan, governor of the People's Bank of China, said at the annual Lujiazui Forum in Shanghai.

Zhou said the central bank will "stick to the reforms in interest rates, currency rate and cross-border use of yuan" and the central bank would stick to a prudent monetary policy and fine-tune it when necessary.

Hu Xiaolian, deputy governor of the central bank, said China had a clear goal to combine internationalization of the yuan with domestic reforms.

Banks have been under the spotlight recently both for their massive profit growth last year and on concerns for future losses due to the economic slowdown and possible bad loans stemming from China's 4 trillion yuan (US$629.6 billion) stimulus initiated in 2009.

"The banking industry has many deep-rooted conflicts and problems," Shang Fulin, chairman of the China Banking Regulatory Commission, said. "Chinese banks should change their business model and increase service to economic growth."

Shang said banks should be less obsessed with expansion, and a multi-level banking sector should be developed to suit the needs of rural areas and small private businesses.

China will also expand financing channels available to banks, allowing them to raise funds overseas and retain higher levels of profit.

Concerning the securities sector, China Securities Regulatory Commission Chairman Guo Shuqing said recent reforming goals include solidifying rules to delist companies from the stock market, diversifying the capital market, tightening inspection on listed companies, and encouraging more institutional investors into the market.

Xiang Junbo, chairman of the China Insurance Regulatory Commission, said insurers should improve their asset management abilities and develop more insurance products to serve the needs of an aging population, agricultural businesses, environmental protection, and health care.