Roundtable on Money and Finance·Spring 2016: Financial Support for the Supply-Side Structural Reform
2016-03-26 IMI
Prof. Guo Qingwang delivered his opening speech. He mentioned that generally, fiscal policies play the role of adjusting structure, while financial policies adjust the total volume. Then, should the supply-side reform focus more on fiscal policies or financial policies? Meanwhile, he pointed out that the structural reform cannot leave financial support, and we need to further discuss what role should the financial system play in the supply-side reform.
Mr. Jiao Jinpu talked about the four key elements of the supply-side reform, i.e., cutting taxes, reducing costs, encouraging innovation and promoting the flexibility of labor market. He discussed how the Reaganomics and Thatcher’s privatization reform of state-owned enterprises had helped western countries in relieving stagflation in the 1980s, and how their experience can be learnt by us to solve our problems. He also explained the supply-side reform thoroughly from 3 aspects: behavior regulation, inclusive finance and financial innovation.
The topic of Dr. Guan Tao’s keynote speech was “increasing and improving financial supply is key to comprehensive supply-side reform”. He pointed out that from both the global and domestic perspectives, finance could support the real economy not only through monetary stimulus, but also through other means. He also analyzed the 6 main parts of Chinese financial supply-side reform, including enriching the financial institution system, improving the financial market system, enhancing the financial innovation function, perfecting the financial macro-control, further opening up the financial system and improving the financial governance system. Meanwhile, he mentioned that the reform should properly balance the relationships between adjusting structure and stabilizing growth, direct financing and indirect financing, supporting development and stabilizing finance, encouraging innovation and regulating in an appropriate manner, further opening up and preventing risks, learning from global experience and considering China’s national conditions, using policy guidance and staying market-oriented.
Prof. Qu Qiang and Prof. Zhao Xijun made comments on the two speakers’ keynote speeches respectively. Prof. Qu Qiang used the development history of western financial theory as an example to illustrate his idea that supply and demand cannot be fully separated, and the government and the market should not stand in complete opposition. Economic development should be transmitted to the production sector on the basis of demand, and thus to realize full market competition. He pointed out that the problem of overcapacity should be solved from the supply side, and he hoped that we could break down financial depression and open up financial access through developing Internet finance. Prof. Zhao Xijun analyzed M2, renminbi loan balance and the ratio of non-performing loans in commercial banks, and illustrated the downward pressure in China’s current monetary aggregates, social financing scale and asset quality of the banking industry. Facing the current situation of the capital market, China should focus on stabilizing the stock market, deepening the reforms on interest rate and exchange rate, accelerating renminbi internationalization and exploring the priority of financial development.
During the roundtable discussion, Mr. Wang Yongli proposed his opinion of properly handling the relationship between the government and the market. Dr. E Zhihuan pointed out that to stabilize the renminbi’s exchange rate, we should consider both the inclusion of renminbi to the SDR basket and the internal and external balance. Mr. Yan Xiandong talked about the problem of how to distribute fiscal policies and monetary policies in the process of the supply-side reform. Mr. Pan Changfeng discussed the existing problems in the current credit system, and said that we should enhance the efficiency of supply-side reform, fight against irregular financial behaviors and prevent huge profits in the financial industry. Ms. Xi Hui put forward 3 key points of the supply-side reform: scientific finance, direct financing and financial support. Prof. Li Xin discussed about the details and landing of supply-side reform and financial support.
Last but not least, Mr. Ben Shenglin concluded the speeches of all the guests. He pointed out that the supply-side reform is still about balancing the relationship between the government and the market. The government should shoulder its responsibility of providing public goods, and make improvements in transaction order, business structure, access and exit mechanisms, punishment mechanism, protection of consumers’ rights, credit environment construction, and guidance of public opinion. Financial institutions, on the other hand, should provide financial products and services, improve their abilities to price risks, and improve self-discipline as well as social responsibility awareness. Individual investors should develop rational, mature investment philosophies. During the process of the supply-side reform, we should clarify responsibilities, optimize structure, embrace technologies and should never forget our original intention to make finance better serve the real economy.
