On the evening of April 3rd, RDCY Seminar Series No.107 was held in Chongyang Institute for Financial Studies at Renmin University of China (RDCY). Professor Zhao Xijun, Deputy Dean of the School of Finance at Renmin University of China (RUC), was invited to give a lecture, interpreting the reform trend of China`s capital market after the “two sessions” . The lecture was moderated by Liu Ying, a researcher at the RDCY.
In his speech, Professor Zhao said that although China`s current financial development has not encountered a major crisis, it still pays a small price. To prevent the serious financial crisis that may occur in the future, we need to avoid the single thinking way of “stimulating the economy only through massive investment”.
He said that finance is taking other people`s money to work for themselves, and there are financial derivatives existed. Financial risk and return are closely linked. Therefore, we need to define the rationality and marginal issues of financial structure and financial risk prevention. Professor Zhao pointed out that the marginal condition of financial development is "marginal investment cost is equal to marginal revenue and marginal financing cost is equal to marginal revenue".
Professor Zhao recalled the financial development of China over the past 20 years, summed up the characteristics of China’s finance and affirmed China’s efforts in the real estate market, stock market, and foreign exchange markets. He proposed that China should prevent and resolve financial risks by treating both root causes and symptoms. Not only should the micro-subjects be de-leveraged, but macro-prudential supervision is also very important. He gave specific proposals from macro and micro perspectives, emphasizing that we must deepen financial reforms, strive to serve the real economy, and prevent and control systemic financial risk .
After the lecture, Professor Zhao responded to the questions from the audience and gave detailed explanations on topics such as deleverage, IPO, local debt, and China-US trade war.