Authored by: Simon Deane and Chris Wong
In the latest Five Year Plan (outlines of which can be found here in English, and here in Chinese), the policymakers of China set out China’s course for economic and social development. Amongst the many areas covered, the plan also sets out Chinese policy in relation the financial industry.
Some points of note include:-
- The Five Year Plan notes China’s intention to develop financial technology and accelerate the digital transformation of financial institutions. In particular, financial institutions are encouraged to use technology throughout their services, including for regulatory matters, risk assessment, and others. The Five Year Plan also seeks to encourage innovation across all sectors, to be supported by all sectors, including the financial sector through the development of new fintech products, and establishing pilot projects by financial institutions.
- To help ensure that China remains competitive and is ready for the new digital age, measures will be introduced to encourage the development of key digital technologies and industries, including technologies that have an application in the world of finance, such as big data, artificial intelligence, blockchain, and cloud computing.
- Integrating digital technologies into the daily lives of the citizens of China is also a focus, with plans to develop platforms and technology to digitise many aspects of life and government services. This is can be seen in the development and promotion of China’s digital currency – reference in the Five Year Plan is made to the fact that policymakers will continue to encourage this development.
- The Five Year Plan also makes references to a desire to improve on many aspects of the banking and financial industry, including plans to improve the governance structures and corporate governance of financial institutions generally (including strengthening oversight of shareholders’ equity and related party transactions), reforming state-owned banks, regulating the development of non-banking financial institutions, and enhancing the inclusiveness of financial services. Other stated intentions include improving on the capital markets of China (including developing institutional investors, fully implementing registration-based IPO systems, and improving the quality of listed companies), improving the market-based bond issuance mechanism, improving on consumer and investor protection systems (including deposit insurance) and so forth.
- China’s intention to participate in the development of international rules and standards on digital technologies, including digital currencies and digital taxes, is also noted in the Five Year Plan – this may mean that Chinese innovations and standards have a greater impact on the developments of similar technologies around the world.
- For Hong Kong, the Five Year Plan outlines China’s support of the city’s status as an international financial and trade centre. The Five Year Plan dedicates sections on encouraging Hong Kong’s continued efforts to building itself as a centre for finance, legal services, technology and innovation, and the mechanisms by which Hong Kong will be integrated into the overall development of its immediate region (the Greater Bay Area) and the Chinese economy as a whole.