2020 has begun. Financial agencies and authorities in China discussed the 2020 financial agenda before the new year has started. Some documents were published very early in the very first week. The Central Bank, the China Securities Regulatory Commission (CSRS), the China Banking and Insurance Regulatory Commission (CBIRC) and the State-owned Assets Supervision and Administration of the State Council (SASAC) have made various announcements on 2020 plans.
The 14th Conference was held by the Financial Stability and Development Committee under the State Council (the FSD Committee) on 7th January. The main topic discussed was easing accessibility and affordability of funds in SMEs financing. This general focus entails that efforts will be primarily vested in the following three directions:
- Highlighting the directory functions of monetary policies;
- Promoting reforms on financial supplies to stimulate vitality of the financial market in entirety and to bring actual support to real economy; and
- Supervision will closely follow development by means of differentiated supervision and incentives to help with market polarization.
The Central Bank moved forward before the official conference by reducing the reserve ratio (also referred to as “RRR”) on 1st January, which will amount to 800 billion RMB. This RRR in consequence lowers the cost in bank funds by 15 billion per year and will be conducted into support in financing by micro, small and private companies.
The CSRC published a draft Directive on Public Securities Investment Funds investing in Quoted Shares of National SMEs in Transfer System on 3rd January to openly draw opinions from the public. Introducing public funds is a means to amplify investors pool and increase the liquidity of quoted shares. The CBIRC also published Guidance on Promoting Premium Development in Banking and Insurance Industries, which depicts a five-year plan for an optimized financial structure in banking and insurance institutional system. The SASAC is working on a better and more updated supervision mechanism with its first step dipping into Trial Measures on Administration of Prohibited or Limited Personnel Entrance in State Enterprises. This is aiming at a stricter policy ensuring unjeopardized supervision in upcoming years.
A signal from all these new year resolutions is that more reforms are expected in China’s financial market. What new things are to come in 2020 that might lead an impact on your (expected) business in China? Stay tuned and ask us to help with your financials when you cross borders.
Global Connect Admin B.V. | Xuan Hao