Macro-Finance Salon (No. 28): The Comprehensive Financial Reform and Management of Regional Risks in Wenzhou

On December 13, the Macro-Finance Salon (No. 28) was held in Renmin University of China. Dr. Wang Yi, senior research fellow of IMI, deputy mayor of Wenzhou, and deputy director-general of the Statistics and Analysis Department of PBoC, was invited as the guest speaker and delivered a keynote speech entitled “The Comprehensive Financial Reform and Management Regional Risks in Wenzhou”. Mr. Zheng Wufu, deputy director-general of the Personnel and Education Department of PBoC, also attended meeting and commented on the speech. The meeting was presided over by Prof. Tu Yonghong, deputy director of IMI and professor of School of Finance at Renmin University. In his speech, Dr. Wang Yi briefed the background and basic information about the comprehensive financial reform in Wenzhou. Based on the characteristics of Wenzhou’s economic structure, he studied the market condition when the financial reform was initiated in 2012, whereby there were large number of small and micro enterprises, large amount of private capital, and substantial difficulties in financing and investment. Therefore, he considered that regional risks in Wenzhou should be managed through financial reforms. However, at the initial stage of the reform, preparations for the formal finance’s exposure to risks were inadequate, and subsequent judicial and taxation problems were difficult to tackle at regional level. He introduced the basic mentality of the financial reform, and concluded the achievements of reform from different perspectives such as “dual chains” of enterprises, handling toxic assets, injecting liquidity, judicial enforcements, the standardization of private financing, the credit system, and the social integrity environment. At last, Dr. Wang shared his reflections on the comprehensive financial reform of Wenzhou. He said that the foundation of industries should be consolidated, and traditional industries need to be upgraded to lay solid foundation for operations in the financial sector. He also said that we should strike a balance between the private financing and the formal finance, be more prudent towards financial innovations, and improve the judicial protection mechanism for bankruptcy and the taxation system for disposing risk capital. According to Dr. Wang, the credit environment and the internal administration within commercial banks need to be optimized, the credit infrastructure must also be strengthened; and the stability of macro policies must be promoted as well.

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