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Wang Yanhang: Nation has unprecedented opportunities for financial reform in next five-year plan

2015-10-29

By Wang Yanhang    Source:Global Times    Published: 2015-10-28

 

Following the opening of the Fifth Plenary Session of the 18th Communist Party of China (CPC) Central Committee on Monday, China`s 13th Five-Year Plan (2016-20) is under heated discussion. The nation is faced with unprecedented opportunities in financial reform and opening-up.


Economy and finance are interdependent. As the world`s second-largest economy, China contributed more than 25 percent of the world`s economic growth during the first four years of the 12th plan (2011-15). With dividends from deepening reform being unleashed, coupled with the increasing momentum of global cooperation, China is set to upgrade its economy and restructure the global economic landscape.


Significant opportunities for development generated by strategic changes have caught global attention. A win-win situation lays the foundation for the survival and development of other nations, so such opportunities will surely be strongly supported by those who have a stake in them. Finance also plays a vital role in international trade. Since China is the world`s biggest trader of goods in the world, and the largest trading partner to over 120 countries and regions in the world, China has the capability to gain greater support from its trading partners.


Considering the performance and perspective of the central authorities, financial regulators and financial institutions during the 12th plan period, there is a sturdy foundation for financial development during the 13th plan period.


Moving forward, more emphasis will be put on the quality, efficiency and sustainability of China`s economic growth.  


Obstacles always exist for any economy in transition. If the relevant authorities do not have the courage to take effective measures and act responsibly, a financial system will not thrive. Unhealthy financial conditions must be rooted out and the laws of the market economy must be introduced.


Under China`s "new normal," as new growth drivers emerge, there have been proportional changes in China`s three industries and its three economic drivers, namely investment, consumption and exports. By setting the gear of growth to a medium- to high-speed, China manages to keep its economic growth at a sustainable pace and on a healthy track.


In the 13th plan period, the finance sector will play a significant role in providing strong funding for economic growth, structural change, industrial upgrading, marketization and environmental issues. The focus of the new plan, very likely, will still be on the growth model, shifting from one that relies heavily on exports, infrastructure investment and manufacturing to one that is consumption-led and more sustainable.


Regarding the international community, the strategies of China`s finance sector include yuan internationalization, progress toward capital-account convertibility, establishment of offshore yuan markets and the "going out" strategy for domestic firms.


In reference to these strategies, the Silk Road Fund has been running effectively, preparations for the Asian Infrastructure Investment Bank are ongoing, and the yuan appears likely to be included in the basket of the IMF`s Special Drawing Rights.


There is still a gap in China`s transition from an influential user of global resources to an influential global resource dispenser. China`s transition in its growth model and economic structure means that the nation is shifting from an absorber of capital and technology to an exporter of these resources. In the next five years, if China seizes these opportunities and makes the best of them, the nation will accomplish this vital transition.


The author is a senior fellow of the Chongyang Institute for Financial Studies at Renmin University of China.

 

Key Words: Five-Year Plan   reform   opening-up  

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