Building a financial powerhouse entails deep reforms

Editor's note: China vows to work faster to boost the country's strength in finance in the next five years. National Business Daily spoke to Tian Xuan, dean of the National Institute of Financial Research at Tsinghua University, on China's journey to becoming a financial powerhouse. Below are excerpts of the interview. The views don't necessarily represent those of China Daily.

The pillars of a strong financial system of China include internationally competitive financial institutions, advanced financial technology innovation capabilities, a sound financial legal and regulatory framework, a high-level financial opening pattern, and a stable international status for the renminbi.

A sound modern financial market system encompasses multitiered capital markets, money markets, and foreign exchange markets that enable the efficient allocation of resources and risk diversification, thus supporting the development of the real economy.

To improve the efficiency and coverage of financial services, technologies such as big data, artificial intelligence and blockchain must be leveraged, as fintech innovation capabilities will serve as the core driving force for the development of the financial system.

These pillars working together will promote the construction of a safe, efficient, open, inclusive and innovative financial system, fully supporting the realization of the country's goal of becoming a financial powerhouse.

The key areas for deepening financial system reform are institutional innovation, deepening supply-side structural reform and optimizing the financial structure.

The development of the stock market, bond market and derivatives market must be coordinated and the differentiated institutional arrangements of the Science and Technology Innovation Board, the Growth Enterprise Market, and the Beijing Stock Exchange should be improved so as to provide diversified financing channels for enterprises of different types and at different stages.

The opening-up of the financial services industry also needs to be accelerated in an orderly manner. The market access restrictions should be relaxed for qualified foreign financial institutions, and Chinese financial institutions should be encouraged to "go global" to participate in international financial market competition and cooperation, and enhance their global resource allocation capabilities and financial services coverage.

Enhancing the resilience and shock resistance of the financial system requires adhering to a systematic approach, coordinating development and security to build a solid financial security barrier.

Reform of the interest rate and exchange rate mechanisms is needed to stabilize the exchange rate and enhance the price buffer mechanism.

To prevent systemic financial risks, the macro-prudential management system should be improved and the risk monitoring, assessment and early warning systems strengthened.

Furthermore, the regulatory system should be streamlined to clarify the boundaries of responsibilities and eliminate regulatory gaps, so as to maintain market order and enhance the confidence of market participants.

Additionally, the construction and upgrading of financial infrastructure must be enhanced to ensure its safe and efficient operation, and the regulation of fintech should be strengthened and its application standardized to prevent technological and ethical risks.

Finally, it is necessary to improve the legal and regulatory system for the protection of financial consumer rights, increase the crackdown on financial violations, strengthen financial consumer education, and develop financial dispute mediation mechanisms to enhance the protection of financial consumers.

This strategy is not only about the development of the financial industry itself, but also an important guarantee for realizing China's modernization.