Wen Jiabao Outlines Six Areas For Financial
Reform
Chinese premier Wen Jiabao, in an address to Chinese
domestic party, government and financial sector leaders
held in Beijing, outlined six major points for reform
during the coming year. In the address, he also touched
upon what he saw as financial and economic challenges
to the Chinese government in the near future.
Wen started by saying that the financial sector had made
impressive improvements in the past year, in the areas
of banking, securities and insurance. In addition, reforms
in the financial sector were impressive. Generally speaking,
the situation had improved.
However, new challenges had also arisen. These included
blind large-scale investments in some sectors and regions,
low-quality development, and shortages of many basic commodities.
Credit had been extended too easily, and many credit arrangements
were "irrational and unreasonable".
He added that the challenges China now faced in the financial
sector were large. Wen emphasized that finance was the
heart of a modern society, and a modern financial sector
had to play a leading role in the economic development
of China. New emphasis had to be placed on the quality
of loans and development projects. A modern credit reporting
structure had to be put in place to meet China's current
needs. Of most interest to foreign investors, Wen said
that China would work to bring the Chinese yuan (RMB)
to a reasonable exchange rate mechanism, but that the
pace of these changes would be set by China. This was
taken to mean that China would move to let the yuan rise
to higher exchange rate against the US dollar, but the
time and place would be controlled by the Chinese government.
Wen concluded by saying that China needed to focus on
six points:
- Deepen reforms of China's state-owned banks
- Improve financial services in rural areas
- Improve asset corporations so that bad loans could
be taken off the books
- Further push and develop market forces to reform China's
economy and improve risk management tools
- Reform and develop the insurance market
- Meet all the requirements of China's joining the WTO
for reform of the financial sector
Wen's statement was taken to mean that special emphasis
in 2004 would be put on managing China's financial sector.
While many observers in the West believe that China is
danger of over-development and a bubble, most in China
believe that the current growth in China is real investment,
but there are certain regions and sectors where there
is poor-quality investment.
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