Source: CGTN Published: 2017-3-2
Liu Zhiqin interviewed by CGTN on China’s financial reform.
Liu Zhiqin, a senior fellow of Chongyang Institute for Financial Studies at Renmin University of China, took an interview in the studio regarding China’s new financial reform at CGTN Global Business on March 2nd in 2017.
Q: Chairman Guo Shuqing said risk prevention in the financial system is a top priority for the financial reform in 2017. What do you think?
A: Yes. I think so. In the past years, it seems that the risk control in China in financial section is the major point and challenge for the Chinese society, also a very dangerous point for China’s development to fulfill a healthy and stable development goal. At the moment, we can see that we also have the overcapacity problem in the financial sector. Why is overcapacity in the financial sector? Because we have debt and credit over-supplied burdens, which can make big trouble for Chinese economists. The oversupply of loans and mortgages in the financial sector can be a huge problem, especially in local government debt sector. So I think risk management is the major challenge for Mr. Guo Shuqing and his team.
Q: Mr. Guo Shuqing is known for a keen and passionate reformer in financial system, what can be expected from him as a chief of China’s banking regulator?
A: I would not prefer to give him the label as a passionate reformer. Because first, a successful reformer should be recognized by the market and public, but at the moment how we can see these challenges become more seriously. For instance, in terms of the non-performing loans of the banking system in the past years, Guo should find a solution to see whether the non-performing loans of the bankers is increasing sharply or not, especially regarding Commercial Banks’ problem. Second, how can he tackle with the cooperation between Internet and traditional banking? How to well manage in both sides? Therefore, I think Guo would have a big job to deal with.
Q: Guo mentioned about zombie companies’ debt, real estate mortgages and the new Internet financing sector during his press conference. What are your observations concerning his remarks?
A: I think all his points are the major challenges for him, but I have to say that it is not an easy job for him to tackle with, especially for the zombie company’s issue. Because Guo could not do it by himself, CBRC would not do it alone as well. It is a problem for the whole system in society, which means that zombie firm debt is a big headache for China’s government. And we are not aware of how many loans and debts the zombie firms have. They have already been lasted for thirty years above, and I have suggested to some organizations that we might issue a general pardon.We should give them a pardon to make them free so that they can have a new start. Otherwise, the zombie company will stay forever. Therefore, these would be big challenges for Guo and his team from my point of view.