Xue Feng: Safeguarding High-Quality Financial Development Through the Rule of Law
Finance constitutes the lifeblood of the national economy and is a vital component of national core competitiveness; the rule of law is an important support for the national governance system and governance capacity. Strengthening the construction of the financial rule of law is an inherent requirement [1] for strengthening the Party’s leadership over financial work, the fundamental goal of which is to provide protection and support for the development of the financial industry. General Secretary Xi Jinping has pointed out: "Financial security relies on systems, vitality lies in the market, and order relies on the rule of law." The Central Financial Work Conference convened at the end of last year proposed: "Persist in promoting the innovative development of finance on market-oriented and law-based tracks." The Decision of the Third Plenary Session of the 20th CPC Central Committee made important arrangements for deepening the reform of the financial system, proposing to "improve the financial regulatory system and incorporate all financial activities into regulation according to the law." On the New Journey, we must protect the high-quality development of China’s finance through the rule of law and accelerate the construction of a financial powerhouse.
Finance is an industry characterized by active innovation; the innovation and development of financial products and services are key forces driving economic growth. Judging from historical experience, the rise of a major power is inseparable from the support of a strong financial system. Since the 18th CPC National Congress, our Party has actively explored the laws of financial development in the New Era, continuously deepened its understanding of the essence of finance with Chinese characteristics, and continuously promoted innovation in financial practice, theory, and systems. The financial system has forcefully supported the overall situation of economic and social development and resolutely fought the tough battle to prevent and defuse major risks, making important contributions to the completion of the building of a moderately prosperous society in all respects as scheduled and the realization of the First Centenary Goal [2]. It must also be seen that financial innovation is a double-edged sword; if it lacks necessary regulation, it may trigger risks, create chaos, and affect economic and social development. The current and upcoming period is the critical period for comprehensively promoting the construction of a strong nation and the great cause of national rejuvenation through Chinese-path modernization. Finance must provide high-quality services for economic and social development. Creating a sound financial rule-of-law environment, accelerating the formation of an efficient implementation system and a rigorous protection system for the financial rule of law, and protecting high-quality financial development through the rule of law will help leverage the positive role of capital while controlling its negative effects. This ensures that finance better serves the real economy, safeguards the interests of the people, and assists the cause of national rejuvenation and building a strong nation through high-quality financial development.
Strengthen financial legislation. General Secretary Xi Jinping emphasized: "It is necessary to establish a complete system of financial laws and market rules." Law is the heavy instrument of national governance, and good laws are the prerequisite for good governance. Only by actively adapting to the needs of economic and social development and high-quality financial development, and by timely filling legal gaps and strengthening weak links, can we ensure that all types of financial activities have laws to follow and rules to abide by, thereby constructing a solid legal foundation for high-quality financial development. The Decision of the Third Plenary Session of the 20th CPC Central Committee proposed to "formulate a Financial Law." We must implement this important arrangement, ensuring it constitutes a relatively complete financial legal system alongside other financial laws and regulations. We must keep pace with the innovative development of finance, promptly promote legislation in key and emerging financial fields, and establish a system for regular legal revision so that the law adapts to the practical needs of financial development. We must persist in bottom-line thinking and extreme-scenario thinking [3], and improve the legal toolbox for safeguarding national financial security.
Increase the intensity of law enforcement. General Secretary Xi Jinping emphasized: "The vitality of a legal system lies in its implementation; we must increase the intensity of financial legal implementation." Only by strengthening the executive force of the financial legal system can we better regulate market order and prevent systemic financial risks. We must continue to crack down on illegal financial activities with a zero-tolerance attitude, resolutely punish illegal crimes and corrupt behavior, vigorously recover stolen goods and mitigate losses, and pursue accountability and responsibility according to the law to strictly prevent moral hazard. In links such as market access, off-site regulation, on-site inspection, piercing look-through of equity [4], consumer protection, prevention of excessive leverage, and combating crime, we must strictly enforce the law and dare to "show the sword" [5]. We must strengthen the work of protecting the rights and interests of financial consumers and effectively safeguard their legitimate rights.
Strengthen financial regulation. General Secretary Xi Jinping emphasized: "Strengthen and improve modern financial regulation and reinforce the financial stability guarantee system." Strong financial regulation is a key core element that a financial powerhouse must possess, providing an important guarantee for the steady operation of the financial system. We must focus on regulation that "has teeth and thorns" [6] and is sharp-edged. On the track of the rule of law, we must strengthen institutional regulation, behavioral regulation, functional regulation, look-through regulation [7], and continuous regulation. We must achieve strict law enforcement across various regulatory processes such as administrative approval, off-site regulation, on-site inspection, and administrative penalties to enhance the legal efficacy of financial regulation. Meanwhile, we must manage not only what is legal but also, and more importantly, what is illegal, improving the regulatory "backstop" mechanism [8] and strictly supervising and holding accountable those instances where regulation is inadequate.