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Li Yong: The 70 years of Wealth Management in China

2019-11-25

On November 4th , the ninth lecture of "The 70th Anniversary of the Founding of The PRC" series which hosted by Chongyang Institute for Financial Studies of Renmin University of China (RDCY) and Huanqiu Web, was held at RDCY.


Li Yong, the Deputy Dean of School of Economics Renmin University of China, delivered a keynote speech on "The 70 years of Wealth Management in China." The lecture was hosted by Chen Zhiheng, an assistant research fellow at RDCY. More than 200 guests attended the lecture.



Over the past 70 years, with the accumulation of people's wealth, China's wealth management industry has developed rapidly and been closely related to our life. But now, there are some controversies in policies for wealth management. Li Yong focuses on the following five aspects.


First, challenges and opportunities we are facing. After the Opening and Reform up, undoubtedly great economic achievements have taken in China in 40 years which is a miracle in human history. There are some structural challenges in the development of economy which require in-depth adjustments and managements. Our attention also needs swift to demographic structure which has present the trend of aging in terms of data since 1999 and has brought two social problems, separately the employment and the growth of economy. From macro policy, major powers are implementing further cutting policy whose effects are limited and unexpected. Therefore, from macro aspects, we should remain prudent in the adjustment of financial policy and the reform promotion, and balance all sides in the countercyclical regulation. According to the past experience, although there are many problems in China's economy, opportunities are still there.


Second, the history and development of wealth management. In the current situation, it is a path to boost economy that financial services real economy thought wealth management. What is the difference between wealth management and asset management?The former one focuses on allocation, but another is related to investment. The rapid development of wealth management is due to the 70 years' tremendous accumulation of residents' wealth. In the future, wealth management will surely become an important industry. Of course, service as the core competitiveness of the industry requires the development and innovation of various financial institutions.



Third, asset allocation and FOF(Fund of Funds). As the driving force to push the development of emerging industry, wealth management is different from traditional banking business and investment banking. The pattern of wealth management in the future will be based on high-risk and high-yield investment. Therefore, investment needs to focus on how to improve the core competitiveness of the investment strategy. China needs to focus on developing a financial system which is dominated by direct financing and play an important role in the process of economic growth, especially the economic growth mode driven by technological innovation.


Fourth, asset allocation and long-term economic growth. As we all know, the economic growth mode driven by technological innovation has basically formed a consensus, and the cultivation of technology-based enterprises is a high-risk and high-yield investment. If the term of financial products does not match well with the survival of the enterprise, it won't be conducive to the continuous development of economy. Therefore, in the future, the extension of funds should be put into consideration.


Finally, historical responsibility. For the financial market and wealth management, from the indirect financing system to the direct financing system with the longer product cycle, institutional investors must differentiate into professional investors and configurators. Financial institutions, such as finance, insurance, and wealth, should be based on allocation and shall build more professional allocation teams to manage large-scale funds with stable yields and small fluctuations.

Key Words: 70 years   wealth Management   RDCY   Li Yong  

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