China ramps up measures to counter financial risks

Editor’s note: Bruce Pang is chief economist and head of research at JLL Greater China. The article reflects the author’s opinions and not necessarily the views of CGTN. It has been translated from Chinese and edited for brevity and clarity.

In a significant move to bolster financial stability, Chinese authorities have unveiled a comprehensive strategy aimed at mitigating risks across key economic sectors. The plan focuses on preventing and defusing risks in the real estate market, local government debt, and small and medium-sized financial institutions.

Real estate sector stabilization

A major component of the strategy is stabilizing the volatile real estate market. Authorities plan to support real estate enterprises equally, regardless of ownership, and to accelerate the construction of affordable housing and the renovation of low-income urban neighbourhoods. This move aims to establish a sustainable development model for the real estate industry.

Addressing local government debt

The government is taking measures to balance the management of local government debt risks with stable economic development. Economically developed provinces are expected to play a key role in this effort, contributing to the nation’s economic growth.

Enhanced financial regulation

China is intensifying its financial regulatory framework to cover all financial activities and eliminate loopholes. This includes improving the precision and effectiveness of financial supervision to prevent both traditional and emerging financial risks.

Supporting smaller financial institutions

Special attention is being given to small and medium-sized financial institutions. The plan involves coordinating reforms, enhancing capital through various channels, and engaging long-term investors to bolster these institutions’ resilience.

Comprehensive risk management

The strategy encompasses various measures, from regulating financial market behavior to guiding market expectations, to prevent risk transmission. Developing an advanced financial regulatory system and comprehensive monitoring mechanisms are key to this approach.

China’s comprehensive approach to managing financial risks underscores its commitment to maintaining financial stability and sustainable economic growth. This multifaceted strategy reflects a nuanced understanding of the complexities of financial risks and their potential impact on the broader economy. As these measures unfold, the global community will be watching keenly, recognizing the significant role of China’s financial stability in the world economy.

(Cover via CFP)

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