Jiao Jie: Advancing Financial Quality Development While Maintaining Stability
The general principle of seeking progress while maintaining stability [1] is an important methodology for doing economic work well, and it is equally essential for our work in finance. Multiple works in the first volume of the Selected Economic Works of Xi Jinping (hereafter referred to as the Selected Works) offer profound expositions on this subject. For instance, the article "The General Principle of Seeking Progress While Maintaining Stability is the Methodology for Doing Economic Work Well" points out: "In adhering to the general principle of seeking progress while maintaining stability, the focus of 'stability' must be placed on stabilizing economic operations to ensure that major fluctuations do not occur in growth, employment, or prices, and to ensure that regional or systemic risks do not emerge in finance. The focus of 'progress' must be placed on adjusting the economic structure and deepening reform and opening up, ensuring that new results are achieved in the transformation of the mode of economic development and innovation-driven development." Furthermore, the article "Following the Path of Financial Development with Chinese Characteristics" notes: "We must adhere to the general principle of seeking progress while maintaining stability. Financial work must persist in seeking progress while maintaining stability, promoting stability through progress, and establishing the new before abolishing the old [2]. We must put stability first; macro-control, financial development, financial reform, financial regulation, and risk disposal must all be stable. The tightening or loosening of financial policy must not be too abrupt, so as to prevent drastic ups and downs. At the same time, we must be proactive and enterprising, hurrying to establish what needs to be established, and to resolve problems and move forward while holding our ground and maintaining the basic situation. We must maintain the prudence of monetary policy, flexibly utilize a variety of policy tools, and promote the steady and healthy development of the macroeconomy." These important discourses profoundly reveal the inherent laws and developmental logic of China's financial operations in the New Era, providing a fundamental compliance for achieving scientific macro-control and promoting high-quality development in the new stage of development.
Adhering to the general principle of seeking progress while maintaining stability in financial work is an essential principle that must be grasped to respond to complex situations and achieve strategic goals. As an important component of national core competitiveness, finance is not only a vital force supporting high-quality development but also plays a strategic role in the games between major powers [3], bearing the important mission of stabilizing expectations, safeguarding security, and promoting transformation. Entering the new stage of development, the key to promoting high-quality development in finance lies in correctly handling the dialectical relationship between "stability" and "progress," and scientifically grasping the priority areas that must remain stable alongside the directions for reform that must be advanced. Only by firmly grasping the general principle of seeking progress while maintaining stability—by assessing the situation, adjusting the rhythm, holding the direction, consolidating the foundation in the process of maintaining systemic stability, and enhancing vitality in the process of promoting reform and innovation—can we continuously improve the ability and level of finance to serve the real economy and ensure that financial work always proceeds steadily along the track of high-quality development.
Adhering to the general principle of seeking progress while maintaining stability in financial work is also an objective requirement for effectively responding to the current complex and severe domestic and international situations. Recently, the United States has imposed so-called "reciprocal tariffs" on its trading partners, triggering a chain reaction in the global financial system. International financial markets bore the brunt of this, with futures for the three major US stock indices falling in response, the Stoxx Europe 600 index facing downward pressure, and emerging market currencies coming under significant strain. This "beggar-thy-neighbor" [4] practice of trade protectionism has undermined the international economic and trade order, causing global capital risk-aversion sentiment to continue rising. Although China's financial market possesses strong resilience, we must remain vigilant against imported inflationary pressures and the risks of abnormal cross-border capital flows. The more the winds are high and the waves are rough [5], the more we must maintain strategic resolve, adhere to the general principle of seeking progress while maintaining stability, and remain calm with determination while moving with order. Regarding "stability," we must focus on preventing the transmission of international capital market turmoil to the domestic market, ensuring financial system stability and reducing the impact of external shocks. Regarding "progress," we must facilitate economic transformation and upgrading through the deepening of financial reform, promoting high-quality development supported by strong domestic demand. At the same time, we must "seek opportunities within crises" [6], promoting high-standard financial opening up to the outside world and increasing China’s competitiveness and voice in the international financial system.
Coordinating Effective Regulation with Efficient Markets
To promote high-quality development of finance through seeking progress while maintaining stability, it is necessary to coordinate and balance the relationship between effective regulation and market vitality. General Secretary Xi Jinping pointed out in "Serving the Real Economy and Preventing Financial Risks" that "In strengthening financial regulation, we must grasp the rhythm and intensity and be mindful of methodology." This important discourse profoundly clarifies that financial regulation must be both powerful and effective, as well as scientific and moderate. To this end, we must persist in a systems concept and dialectical thinking, achieving precision in policy implementation and realizing a dynamic balance between safeguarding financial security and maintaining market vitality. Finance is an important entry point for improving the socialist market economy system and a vital fulcrum for allowing the market to play the decisive role in resource allocation. To give full play to the functions of finance in serving the real economy and smoothing the economic cycle, we must grasp scientific rigor, systematicity, and precision in regulation, effectively enhancing governance capabilities. Effective regulation and efficient markets are not opposites; the key lies in promoting a virtuous cycle between the two through institutional arrangements. Only within a framework of clear rules and distinct boundaries can we achieve the organic unity of risk prevention, optimized allocation, and enhanced efficiency.
Currently, there are still issues of incoordination between financial regulation and market requirements. It must be recognized that incomplete regulatory systems and mismatched regulatory means easily lead to financial chaos and the frequent occurrence of risks. Conversely, simple and crude regulatory measures can restrict innovation in financial products and services, which is detrimental to the formation of a healthy market mechanism. This state of affairs—being either "too lax" or "too strict"—weakens the stability and developmental capacity of the financial system and deviates from the goal of the synergistic advancement of effective regulation and efficient markets. The key to breaking this deadlock lies in coordinating the relationship between "stability" and "progress," achieving the organic unity of effective regulation and efficient markets within the construction of a modern financial system with Chinese characteristics. The goal of regulation is not to suppress market vitality but to provide clear boundaries and a healthy environment for market operation through rule design, institutional arrangements, and the guidance of expectations. The function of the market is not spontaneous disorder, but the optimization of resource allocation, the stimulation of innovative vitality, and the improvement of competitive efficiency within a rule-of-law framework.
To better coordinate effective regulation and efficient markets in building a modern financial system with Chinese characteristics, we must advance synergistically in the following areas. First, we must persist in the CPC Central Committee’s centralized and unified leadership over financial work. The Party's leadership is the greatest political and institutional advantage of China's financial development and the most essential characteristic of the path of financial development with Chinese characteristics. Persisting in and strengthening the centralized and unified leadership of the CPC Central Committee is a matter of the direction, stance, and efficacy of financial work. We must effectively strengthen the Party's comprehensive leadership over financial work, integrate Party leadership into all processes and links of corporate governance, strengthen political supervision, and ensure that financial work always moves forward in the correct direction. Second, we must strengthen financial regulation and enhance its systematic and collaborative nature. We must grasp the rhythm and intensity of regulation, improve methods, and comprehensively reinforce institutional regulation, behavioral regulation, functional regulation, look-through regulation, and continuous regulation to enhance institutional enforcement and governance efficacy. We must establish and improve a complete and effective financial regulatory system, bringing all financial activities under regulation according to the law. We must improve mechanisms for financial risk prevention, early warning, and disposal, enhancing the ability for early identification, early intervention, and early disposal to hold the bottom line against systemic risks. Third, we must create a modern system of financial institutions and markets to improve the efficiency of financial resource allocation and service levels. We should accelerate the construction of a capital market that is secure, standardized, transparent, open, vibrant, and resilient, optimizing the product system and broadening sources of medium-to-long-term capital. We should encourage large state-owned financial institutions to enhance their service and stabilization functions and guide small and medium-sized financial institutions to reduce quantity while improving quality through differentiated development. We must strengthen corporate governance, prevent the disorderly expansion of capital and the crossover of risks, and build an isolation mechanism between industrial and financial capital.
Coordinating the Strengthening of Financial Services for the Real Economy with the Improvement of Professionalism in Financial Work
Finance and the real economy share a symbiotic relationship of mutual prosperity. Promoting the high-quality development of finance through seeking progress while maintaining stability requires coordinating the strengthening of the ability of finance to serve the real economy with the improvement of professionalism in financial work. General Secretary Xi Jinping pointed out in "Following the Path of Financial Development with Chinese Characteristics" that "The real economy is the foundation of finance, and finance is the lifeblood of the real economy; serving the real economy is the celestial duty of finance." This important discourse clarifies the inherent requirements and forward direction for finance to serve the real economy, pointing the way toward improving the efficiency and level of such services.
Self-circulation and self-expansion [7] are prominent forms of chaos in the financial field, often leading to a situation where improvements in capital efficiency fail to translate effectively into support for the real economy, and the allocation of financial resources fails to fully exert its intended social benefits. To better serve the real economy and key national areas and ensure the efficient operation of finance, we must guide the allocation of financial resources through institutional and structural means, improving the precision of financial services and the capacity of finance to support the real economy. This is not only an urgent need for promoting the high-quality development of finance but also a vital support for strengthening innovation-driven development, accelerating the comprehensive green transition of economic and social development, and better improving people's well-being. To this end, we must pay more attention to the alignment between financial services and national development strategies, promoting the flow of financial resources toward emerging industries, infrastructure construction, and major technological innovations to provide a powerful impetus for the sustained and healthy development of China's economy. Strengthening the ability of finance to serve the real economy and promoting the professional and efficient operation of finance are not opposites; the key lies in promoting their mutual reinforcement and coordinated development through structural deployment to lay a solid foundation for high-quality development.
Specifically, efforts can be focused on the following areas. First, we must persist in the people-centered development philosophy. The financial cause led by our Party must, in the final analysis, benefit the people. To this end, we must improve the formulation and implementation mechanisms for inclusive finance [8] policies, as well as supporting mechanisms for fiscal, monetary, and tax policies, and effectively utilize the "precision irrigation" [9] role of structural monetary policy tools. We should encourage and guide financial institutions to shift their focus downward to the grassroots, promoting the flow of more financial resources toward small and micro-enterprises, "agriculture, rural areas, and farmers" [10], and individual industrial and commercial households to improve the diversity, inclusiveness, and accessibility of financial services. Particularly against the current backdrop of unstable external demand, finance should focus on promoting consumption growth, giving full play to the advantages of the domestic Great Circulation, and stimulating domestic consumption potential. Second, we must strengthen the capacity for financial supply in professional fields. We should accelerate the development of technology finance, green finance, pension finance, and digital finance; improve the product system adapted to the conversion of scientific and technological achievements and the development of green projects; promote innovation in financing mechanisms for "specialized, refined, unique, and innovative" enterprises [11]; and broaden channels for medium-to-long-term capital support. We must improve the financial support system that matches the development of new quality productive forces, promoting the more precise flow of financial resources toward key fields and core links. Third, we must promote the structural optimization and mechanism improvement of the financial service system. We should guide large state-owned financial institutions to enhance their comprehensive service capabilities and play the role of the "main force" in serving the real economy. We should encourage small and medium-sized financial institutions to reduce quantity while improving quality and develop with specialized features, focusing on regional advantages. We must improve corporate governance structures, refine performance appraisal and "due diligence exemption" [12] systems for serving the real economy, and establish long-term mechanisms where institutions "dare to lend, are willing to lend, are able to lend, and know how to lend."
Coordinating Financial Opening Up and Security
General Secretary Xi Jinping pointed out in "Following the Path of Financial Development with Chinese Characteristics": "We must persist in coordinating financial opening up and security. Financial opening up to the outside world must ensure national financial and economic security; we must guard against the risks brought by opening up itself and also against risks deliberately created by rival players." This is an inherent requirement for advancing high-standard financial opening up in the New Era. While unswervingly promoting financial opening up, strengthening risk awareness is of great significance for following the path of financial development with Chinese characteristics under the current new situation and new challenges.
Opening up to the outside world is an inherent requirement for China's financial development and an important measure for building the new development landscape, improving resource allocation efficiency, and enhancing global influence. Particularly in the current context of steadily expanding institutional opening up and steadily promoting the internationalization of the Renminbi, strengthening financial opening up is an inevitable choice for enhancing the international competitiveness of China's financial system, shaping new advantages, and playing a greater role in global economic and financial governance. At the same time, we must clearly recognize that opening up means expanded risk exposure and an increased possibility of facing external shocks and cross-border transmission. Only by firmly holding the bottom line of financial security can we achieve a virtuous cycle of opening up and development on a larger scale, in wider fields, and at deeper levels.
The key to coordinating financial opening up and security lies in strengthening strategic resolve, grasping the rhythm and intensity of opening up, and improving financial management capabilities and risk prevention and control capabilities. Currently, China is promoting two-way financial opening up, but there are still shortcomings in terms of rules and standards, system connectivity, and cross-border regulation. To actively respond to rising external uncertainties and increasing international competitive pressures, we must pay more attention to the safety, controllability, and sustainability of opening up, effectively preventing systemic risk hazards such as the large-scale inflow and outflow of cross-border capital, foreign capital arbitrage, and policy spillovers.
To achieve the coordinated development of high-standard financial opening up and security, efforts should focus on the following areas. First, we must advance institutional opening up in the financial field. We should further improve the rule system, enhance policy transparency and stability, and proactively align with relevant financial rules in high-standard international economic and trade agreements. We should further utilize the role of Free Trade Zones as "experimental fields" for high-level reform and opening up, exploring experiences in cross-border financial innovation and enhancing the guidance and operability of institutional opening up. Second, we must expand international financial cooperation mechanisms. We should deepen cooperation with multilateral mechanisms such as the Asian Infrastructure Investment Bank and the Silk Road Fund, support the development of countries and regions participating in the Belt and Road Initiative, and improve medium-to-long-term investment and financing arrangements. We should promote cross-border settlement and internationalization of the Renminbi, improving its efficiency in international trade. We should encourage financial institutions to "go global" [13], coordinate with international development agencies, and enhance the capacity to provide international public goods. Third, we must improve cross-border financial risk prevention and control mechanisms. We should refine the "two-pillar" adjustment framework of monetary policy and macro-prudential policy, strengthen monitoring and early warning mechanisms for cross-border capital flows, and promote institutional alignment and regulatory coordination between domestic and foreign financial markets to ensure that financial stability and risk prevention and control are powerfully implemented.
As an important platform for financial higher education and academic and policy research in China, the PBC School of Finance at Tsinghua University will deeply study the Selected Works. Guided by Xi Jinping Thought on Economy, it will closely align with national financial strategic needs, grasp the direction and purpose of financial work, and cultivate high-quality financial leaders with a global perspective and innovative thinking. It aims to provide powerful intellectual support for pushing forward the high-quality development of China's finance and deepening financial reform, and to contribute frontier academic achievements and practical wisdom to the improvement of the global financial governance system.