Fang Ying: Leading High-Quality Financial Development with New Development Concepts
Volume I of the Selected Economic Works of Xi Jinping (hereafter referred to as the Selected Works) is an authoritative textbook for the in-depth study and implementation of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, particularly Xi Jinping’s economic thought. Finance is the core of the modern economy and a vital component of national core competitiveness. General Secretary Xi Jinping attaches great importance to financial work and has put forward a series of important expositions on major theoretical and practical issues regarding the development of the financial cause. These insights have elevated our Party's understanding of the essential laws and development path of financial work to a new height, formulating the "financial chapters" of Xi Jinping’s economic thought. This is of profound significance for unswervingly following the path of financial development with Chinese characteristics and promoting high-quality development in the New Era and on the new journey.
Multiple works within the Selected Works offer profound expositions on the development of the financial cause. For instance, "Correctly Understanding and Grasping Major Theoretical and Practical Issues in Our Country’s Development" points out: "We must explore how to leverage the positive role of capital while effectively controlling its negative effects under the conditions of a socialist market economy." Furthermore, "Providing High-Quality Financial Services for Economic and Social Development" notes: "The 20th National Congress made it clear that high-quality development is the primary task in building a modern socialist country in all respects, which points out the direction and goal for optimizing financial services," and so forth.
To unswervingly follow the path of financial development with Chinese characteristics and promote high-quality financial development, we must adhere to correct concepts. The new development philosophy [1] profoundly answers a series of theoretical and practical questions regarding the purpose, power, mode, and path of development; it is the most important and primary component of Xi Jinping’s economic thought. General Secretary Xi Jinping pointed out in "Serving the Real Economy and Preventing Financial Risks": "We must integrate the laws and characteristics of the financial industry's development to properly implement the new development philosophy." The new development philosophy is the ideological guide for promoting high-quality development, as well as the ideological guide for promoting high-quality financial development. The financial chaos [2] that emerged in the past was, to a large extent, because we deviated from the correct guidance of the new development philosophy in our ideological understanding and practical work, ultimately drifting away from the correct direction of high-quality financial development.
Promoting high-quality financial development requires the complete, accurate, and comprehensive implementation of the new development philosophy, with a focus on firmly grasping the following three aspects.
First, we must adhere to the people-centered development philosophy. General Secretary Xi Jinping pointed out in "Taking the Path of Financial Development with Chinese Characteristics": "The financial cause led by our Party, in the final analysis, is to benefit the people." Our country’s finance adheres to a people-centered development philosophy, which is diametrically opposed to the stance in some countries where finance serves capital and a small number of wealthy individuals. To lead high-quality financial development with the new development philosophy, we must stand firmly on the side of the people, profoundly grasp the "people-oriented nature" (人民性) of financial work, and enhance the diversity, universality, and accessibility of financial services. We must maintain a primary orientation of finance benefiting the people, strengthen service awareness, and increase financial investment in rural revitalization to support the "firmly holding the grain rice bowl" [3], serve the development of rural industries, and promote the increase of farmers' income and prosperity. We must continually improve the policy system for financial support of small, medium, and micro enterprises (MSMEs) and private enterprises to further alleviate problems such as "financing difficulties and high financing costs." We should develop more financial products that meet the needs of the masses in areas such as medical care, elderly care, and education and training. We should increase fiscal and financial policy support for the health industry, the elderly care industry, and the "silver economy," enrich the supply of elderly care financial products in a targeted manner, actively develop the "third pillar" of pension insurance [4], and better meet increasingly diversified financial needs for the elderly. We must improve the service delivery of financial institutions so that financial products—which combine safety, profitability, and liquidity—can "enter the homes of ordinary people," thereby better protecting the rights and interests of financial consumers.
Second, we must adhere to the fundamental purpose of finance serving the real economy [5], and earnestly strengthen high-quality financial services for major strategies, key areas, and weak links. General Secretary Xi Jinping pointed out in "Serving the Real Economy and Preventing Financial Risks": "A prominent problem facing our country's economic development is that the demand structure has upgraded, but the supply system has not kept up, resulting in a structural imbalance between supply and demand, which leads to sluggish circulation in the real economy. This is precisely the basic problem that supply-side structural reform aims to solve, and it is also the basic task for finance to serve the real economy at present and in the period ahead." Currently, the factors constraining our country’s economic development are mainly structural, including an irrational financial structure, which is closely related to the inadequacy of financial services for the real economy. Supply-side structural reform is the main thread of economic work, and it is also the main thread of financial work. To deepen financial supply-side structural reform, we must implement the new development philosophy, identify the key points for financial services, and remain true to our duty of serving the real economy. With the structural adjustment and optimization of the financial system as the focus, we must optimize the financing structure, the system of financial institutions, the market system, and the product system to provide higher-quality and more efficient financial services for the development of the real economy. For example, the focus of optimizing the financing structure lies in optimizing the ratio of direct to indirect financing and equity to debt financing, so as to better leverage the role of the capital market. Optimizing the structure of funds supply requires the skill of "addition and subtraction" [6]: increasing financial resource investment in technological innovation, green development, and MSMEs; vigorously supporting the implementation of the innovation-driven development strategy and the regional coordinated development strategy; while simultaneously reducing ineffective and low-end supply, promoting the effective resolution of overcapacity, and the exit of "zombie enterprises." In deepening financial supply-side structural reform, we must give full play to the decisive role of the market in resource allocation, while simultaneously strengthening financial regulation in all respects and persisting in promoting financial innovation and development on the tracks of marketization and the rule of law.
Third, we must persist in regarding risk prevention and control as the eternal theme of financial work. General Secretary Xi Jinping pointed out in "Serving the Real Economy and Preventing Financial Risks": "Preventing and defusing financial risks, especially preventing systemic financial risks, is the fundamental task and the eternal theme of financial work." As the principal contradiction in our society [7] changes and the international balance of power undergoes profound adjustments, we must enhance our awareness of potential dangers, adhere to bottom-line thinking, and be prepared at all times to respond to more complex and difficult situations. Finance has the functions of managing and dispersing risk, but it also contains inherent risk. The scale and complexity of our country's finance are unlike anything in the past, and the systemic and correlational nature of risks has been greatly enhanced. To this end, we must adhere to the general principle of seeking progress while maintaining stability, place the proactive prevention and resolution of financial risks in a more prominent position, and enhance the resilience of the financial system. We must prevent financial risks scientifically, improve the financial safety line and risk emergency response mechanisms, and achieve early identification, early warning, early discovery, and early disposal. We must strengthen the control of risk at its source, overhaul various types of financial chaos, and strive to "repair the house before it rains" (未雨绸缪) [8] and prevent trouble before it happens. We must actively and steadily prevent and handle prominent risk points, strictly prevent and defuse liquidity risk, credit risk, shadow banking risk, abnormal capital market volatility risk, and insurance market risk. We must earnestly safeguard against financial network technology and information security risks, effectively guard against the risks of cross-border capital flows, and ensure the safe, efficient, and stable operation of finance.
NOTES
[1] 新发展理念 (xīn fāzhǎn lǐniàn): The "New Development Philosophy," introduced by Xi Jinping in 2015, consists of five key concepts: innovation, coordination, green development, openness, and sharing (创新、协调、绿色、开放、共享). It is intended to shift China from high-speed growth to high-quality development.
[2] 金融乱象 (jīnróng luànxiàng): Refers to the "financial chaos" or "disorder" characterized by the rapid expansion of shadow banking, peer-to-peer (P2P) lending collapses, and excessive leverage in the mid-2010s, which led to a major regulatory crackdown beginning in 2017.
[3] 粮食饭碗 (liángshí fànwǎn): A common metaphor in CPC discourse ("holding the rice bowl firmly in one's own hands") emphasizing national food security and self-sufficiency in grain production as a strategic necessity.
[4] 第三支柱养老保险 (dì sān zhīzhù yǎnglǎo bǎoxiǎn): The "Third Pillar" refers to private, individual voluntary pension schemes, complementing the "First Pillar" (basic state pension) and "Second Pillar" (enterprise annuities).
[5] 实体经济 (shítǐ jīngjì): The "real economy." In Chinese Marxist political economy, this refers to the production of goods and non-financial services, contrasted with the "fictitious economy" (虚拟经济), which includes speculative finance and real estate bubbles.
[6] 加法和减法 (jiāfǎ hé jiǎnfǎ): "Addition and subtraction." A metaphorical approach to structural reform—"adding" support for emerging, high-tech, and green industries while "subtracting" support for outdated, high-pollution, and over-capacity industries.
[7] 社会主要矛盾 (shèhuì zhǔyào máodùn): The "principal contradiction" is a fundamental concept in Maoist and post-Mao dialectics. In 2017, Xi Jinping redefined it as the contradiction between "unbalanced and inadequate development and the people's ever-growing need for a better life."
[8] 未雨绸缪 (wèi yǔ chóu móu): A classical idiom from the Classic of Poetry (诗经). Literally: "to bind the windows with silk before it rains." It means to take precautions or prepare for a rainy day.