Road map for financial reform

Editor's note: The author, the governor of the People's Bank of China, outlines financial reforms in his recent article in People's Daily. The following is the first part of an excerpted translation.

In a move to push for improving China's modern market system, the Third Plenary Session of the 18th Central Committee of the Communist Party of China has drawn up a road map for comprehensive and deepened reforms.

As the core of a modern economy, the financial sector is at the heart of China's socialist market system. To do a better job in the financial sector in the future, the country should firmly hold on to the essential principle that the financial sector should serve the real economy, adhere to the reform direction that the market dominates the distribution of financial resources, and stick to a development concept that prioritizes coordination between innovation and oversight.

In line with the plenum's mapped program, we need to comprehensively push for reforms, opening-up and development, and accelerate the establishment of a safe, sound and modern financial market system with a broader range of services, a reasonable structure and greater efficiency.

A more competitive and inclusive financial services sector

Efforts will be made to expand the opening-up of the domestic financial sector, and, under the precondition of strengthened financial supervision, small-and medium-sized banks and other private financial institutions will be allowed to enter the market.

1. To expand financial opening-up.

Efforts will be made to both raise the country's capabilities in the distribution of financial resources, so they cover a wider range and are at a higher level, and boost the quality of its financial services. Efforts will also be made to strengthen the competitiveness of domestic financial departments and promote the cross-border use of the RMB, as well as the establishment of an international financial center to push for China's economic transformation and structural upgrading. Measures will be taken to further expand the opening-up of the financial sector and gradually follow the new opening-up model that entails pre-establishment national treatment and negative lists and the promotion of a high-level opening-up of the domestic financial services sector.

2. To allow for the establishment of financial institutions by private capital under the condition of strengthened oversight.

Based on the principles of equity, openness and transparency, a unified market access system will be adopted to encourage and guide the flow of private capital to financial services. As a service sector with fierce competition, the financial sector should, in accordance with the negative lists market access system and the requirement for services expansion, provide a market environment for equitable competition and the entry of various kinds of investors. To allow qualified private capital to set up small-and medium-sized financial institutions when strengthened oversight is in place will create the supply of necessary and competitive financial products to the real economy, which will help some local regions and small-and micro-sized enterprises ease their fund shortages.