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Deepening Reform and Opening up of Capital markets, Aiming at High-quality Development—Speech by CSRC Vice Chairman Jiang Yang at the 11th Asian Financial Forum 2018
16-01-2018

Distinguished Guests, ladies and gentlemen,

  Good morning. It is my great pleasure to attend the 11th Asian Financial Forum. First of all, I would like to extend my congratulations to the convening of the forum on behalf of the China Securities Regulatory Commission(CSRC). As it is stated in the 19th  National Congress of the Communist Party of China, China's economy has been transitioning from a phase of rapid growth to a new stage of high-quality development, which is a significant judgement and strategic positioning of our economy in a new era. Globally speaking, countries of the world face common challenges to achieve robust, sustainable, balanced and inclusive growth. Under the theme "Steering Growth and Pioneering Innovation", the forum today is indeed of significant relevance. 

  During the past decade after the global financial crisis, the world economy has witnessed profound adjustment. Although recovery is expected to continue in the near future, the deep-rooted issues and problems remain. Many countries are striving to shake off the aftermath of the crisis, by rolling out structural reform, boosting investment in the Research & Development of advanced manufacturing, new energy, Information Technology & Internet technology, nurturing another round of technological revolution and industrial transformation globally. A decade ago, the world's Top 10 listed companies by market value are mostly energy tycoons, bank groups or financial conglomerates. Today, 7 out of the Top 10 listed companies are internet or high-tech companies. It is already a common understanding that, we should improve the quality of development, driven by innovation and internal growth momentum.

  In China's perspective, through four decades of rapid economic growth, the principal contradiction facing the Chinese society has also seen profound changes. Since the extensive growth model of the past days is no longer sustainable, it is strategically important for China to put more emphasis on quality, efficiency, equity and sustainability while developing its economy in the new era. At this historical juncture, we must work hard to meet the people's ever-growing need for a better life, by improving the quality of development, accelerating the transformation of growth model, optimizing economic structure, and fostering new drivers of growth.

  High quality economic growth may not be possible without the support of the financial sector. As an important platform to allocate financial resources, the capital markets play a unique role in discovering price, sharing risks, and stimulating innovation. In recent years, the multi-tiered capital markets have been developed, fundamental institutional reforms have been deepened, law-based, comprehensive and strict supervision has been imposed, all of which contributing to the capital markets' much greater capability of serving the real economy. By now, there have been around 3500 domestic listed companies in China, with equity financing proceeds and M&A transaction value ranging among the world's top league, making breakthroughs in industrial upgrading, poverty alleviation, innovation and environmental protection. But we are also fully aware of the fact that, the capital markets are still the relatively weaker link of the financial system in China, and thus still have a long way ahead. We must adhere to the ultimate goal of high quality development, implement the principal task of supply-side structural reform, and continue to make the capital markets better serve the real economy, while improving the weak links and mitigating potential risks.

  1. Expand direct financing

  Direct financing is the key to capital formation and business de-leveraging. The CSRC will put direct financing especially equity financing at the center of our work, explore equity financing channels that form a layered, diversified and complementary structure. Capital markets' role as major M&A platform shall be honored and M&As that are based on industrial integration shall be encouraged. On the bond market, the CSRC will actively facilitate product innovation, promote the development of exchangeable bond, green bond, revenue bond etc. and steer the market onto a path that values both quantity and quality.

  2. Serve scientific and technological innovation

  Innovation is the leading force of development and fundamental approach to raise total factor productivity. The CSRC will deepen reform in the Main Board, SME Board and CHINEXT, further improve the classified and differentiated rule framework for NEEQ admission and trading, encourage dynamic and regulated development of private equity investment such as angel capital and venture capital. We aim for innovative institutional arrangements to strengthen support for high-tech companies, novel economic models and emerging industries that contribute to national development strategies and have core competing edge.

  3. Seek new grounds in two-way opening-up

  Advancing reform, development and innovation through opening-up, is a tested and successful practice in China's economic development. The CSRC will give equal emphasis to "bringing in" and "going global", significantly ease market access, encourage domestic institutions to pursue internationalized operations in steady steps. The CSRC will deepen reforms in overseas listing rules, consistently improve QFII and RQFII regimes; encourage domestic exchanges, securities and futures companies and listed companies to actively engage in the Belt and Road initiative. Crude oil futures will be launched and we welcome the participation of both domestic and overseas investors, catering for companies' and investors' risk management needs.

  4. Safeguard market stability

  Only a stable and sound market can best serve high-quality growth. The CSRC will closely follow the central government's requirement to fight the critical battle of major risk prevention and mitigation, continue to step up law-based, comprehensive and strict regulation, give full play to the exchanges' functions as front-line supervisors, make full use of information technology to achieve intelligent and scientific regulation; take a hard stance against market speculation and make continuous efforts to cleanse the market environment.

  Distinguished guests, ladies and gentlemen,

  Hong Kong is called "Pearl of the Orient" and has always been an important international financial center. The 19th National Congress of the Communist Party of China pointed out that we shall maintain long-term prosperity and stability in Hong Kong, continue to support Hong Kong in integrating its own development into the overall development of the motherland in general, and fully advance mutually beneficial cooperation between Hong Kong and the mainland. Over the recent years, the CSRC has been enhancing pragmatic cooperation and two-way opening-up between the capital markets in Hong Kong and the mainland, with the Shanghai-Hong Kong Stock Connect, the Shenzhen-Hong Kong Stock Connect, and the Mainland-Hong Kong Mutual Recognition of Funds, pooling capital, technology, information, wisdom from the two markets and beyond to bring benefits to the economic development in the mainland, Hong Kong and the rest of the world. Looking forward, the CSRC will continue to support Hong Kong in its efforts to consolidate and improve its status as an international financial center; further improve the two Stock Connect schemes and diversify products under such schemes; take steady steps to launch the "full circulation" pilot of H-shares and encourage qualified companies to make cross-boundary bond issuance in overseas markets; step up cross-boundary regulatory and enforcement cooperation for steady operations of the two markets and the Stock Connect schemes; encourage Hong Kong to use its unique advantages and actively engage in major development area such as the Belt and Road Initiative, RMB Internationalization, and the Guangdong-Hong Kong-Macau Greater Bay Area. We firmly believe that, with joint efforts, the two markets will grasp the opportunity, combine their complementary strengths, shoulder the responsibility of building world-class capital markets for China, and facilitate the Asian and global economic development by contributing China strength.

  Wish the Forum a great success. Thank you all very much.



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