The Public Policy Research Center of the Counsellors’ Office of the State Council and Xinhuanet co-organized the first 2018 Counsellors’ Lecture on May 14th. Xia Bin, Counsellor of the State Council and Honorary President of the Financial Research Institute of the State Council Development Research Center, made a keynote speech “Preventing Systemic Risks as the Bottom Line”, in which he analyzed the financial risks in China and ways to tackle them.

Xia Bin made a keynote speech at the Counsellors’ Lecture

China’s central leadership places great emphasis on preventing and controlling financial risks. The report delivered to the 19th Party Congress calls for strengthening financial regulation system and preventing systemic financial risks as the bottom line. Last year, the State Council established the Financial Stability and Development Commission. During the 2018 NPC and CPPCC sessions, the institutional reform plan was adopted, China’s financial regulation architecture was transformed from “one central bank plus three regulatory commissions” to “one central bank plus two regulatory commissions”, thus ushering in a new era for financial regulation.

Why is close attention paid to preventing financial risks during the new round of economic transition? Xia gave his answer from three perspectives: features of economic transition, features and harm of systemic risks as well as key factors for preventing systemic risks. In Xia’s opinion, economic transition is prone to financial risks. Systemic risks are known to be contagious and covert.

What are the hidden financial risks? Xia Bin said clues could be found in the changing macro data and related industries and local data that may cause the disruption of the chain of payment. “Close attention must be paid to housing bubbles, local government debts, overcapacity and shadow banking,” said Xia.

Audiences listening attentively at the Counsellors’ Lecture

How to prevent systemic risks? Xia proposed four principles to tackle the risks: blood stopping, co-sharing, cost and time. Specific measures include controlling monetary supply, stabilizing housing prices, improving regulation, and optimizing structure through reform and innovation.

As part of the new round of opening-up, China has adopted policies for financial opening-up. Foreign financial institutions are entering the Chinese market at a faster pace and received wide attention. In response to the questions raised by the audience concerning risks associated with financial opening-up, Xia said financial opening up can help improve China’s competitiveness, but opening up should not be simplified and there must be tactics.

During the roundtable discussion, Xia Bin, Counsellor of the Guangdong Provincial Government Liu Xiaohui, Director of Rushi Financial Research Institute Guan Qingyou and Ping’an Securities Chief Economist Zhang Ming had an in-depth dialogue on current hot topics. Guan Qingyou believed that one should be concerned about risks but not be afraid of them. Zhang Ming believed that it is important to prevent risks as much as to release risks. Liu Xiaohui gave a briefing on what Guangdong had done to prevent systemic risks and said that current financial risks are controllable.

Guests exchanged ideas during the roundtable discussion.

Counsellors’ Lecture is co-organized by the Public Policy Research Center of the State Council and Xinhuanet. Counsellors of the State Council, who are experts in various fields, are invited to speak on hot topics and interacted with other counsellors and academics to share insights and send out rational viewpoints.