context: To deter disordered domestic expansion and tackle external turbulence, the CPC founded a new Central Financial Commission to guide financial market operations in 2023. Xi Jinping习近平 hopes to improve FDI (foreign direct investment), and securitise financial operations and consolidate Party leadership. Having the power to review major policy decisions, the Commission is responsible for strengthening Party control and supervision over finance.
Chinese-style financial development is fundamentally different from the Western financial model, contends Xi Jinping 习近平. The Central Committee combined Marxist financial theories with both the contemporary realities and traditional cultural elements of the PRC to develop a unique path towards financial development. In particular, Xi stressed the importance of the ‘eight insistence’
- maintain the Central Committee’s unitary leadership over financial work
- uphold people-centric values as guidance
- financial development should benefit the real economy
- risk management should be prioritised
- promote financial R&D based on the rule by law
- deepen financial supply-side reform
- balance financial opening-up and security needs
- maintain an orderly progress
These principles guide the PRC’s development into a ‘financial great power’. Such power, according to Xi, encompasses the following characteristics
- a strong currency
- a strong central bank
- powerful financial institutions
- strong international financial centres
- robust financial supervision
- attracts financial talents
To support developmental initiatives, there is a need to develop a Chinese-style contemporary financial system to sustain and secure growth. The following elements should be present in a matured system
- a scientific and stable financial adjustment system
- a structurally balanced financial market system
- a collaborative financial institution system
- an effective financial supervision system
- a diversified financial products and services system
- an independent, self-sustainable, safe and effective financial infrastructure system
The system needs to be maintained by effective risk resolution capabilities
- strengthen preventive measures against financial risks, especially systematic ones
- financial supervision departments and specialised state agencies should clarify their responsibilities and enhance collaboration
- maintain strict law enforcement efforts throughout the entire process
- market access evaluation
- procedural inspection
- conduct regulation
- local institutions ought to
- understand their unique roles in national strategic arrangements
- be held responsible for local risk management and stability maintenance
- strictly crackdown financial crimes and corruption
- develop an accountability system that holds the following institutions responsible for their designated duties
- financial management departments
- macro-adjustment departments
- specialised state agencies
- the judiciary
- discipline inspection commissions