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CCDC Held the 5th F.10 Forum—Focus on Risk Prevention and Control




On October 25, CCDC held the No.10 Financial Street Forum (F.10 Forum) in Beijing. In response to the spirit of the National Financial Work Conference, the theme of this forum is “Looking into ‘Gray Rhino’”. More than ten macroeconomic and financial market experts had an in-depth discussion on financial risk prevention and control issues.


Chen Gangming, President of CCDC, addressed the opening ceremony and pointed out that the importance and urgency of resolving financial risks and maintaining financial stability has become increasingly prominent. It is therefore necessary to foster a correct understanding of financial security, to have a better knowledge of the financial situation, to look at the risks in an objective way, and to clearly recognize the relationship between risk revelation and risk accumulation. In addition, we must also pay more attentions to the ways of preventing and resolving financial risks, with a view of managing the risks in a systemic way and with priority. With respect to the risk management in China bond market, the key should be, as noted by Chen Gangming, consolidating the basis of stability and market-oriented institutions, promoting the use of risk control tools, and enhancing the role of market infrastructure.


The agenda of the forum tried to broadly cover the spectrum of financial risks. Zhang Chenghui, the former director of the Institute of Finance, Development Research Center of State Council, delivered a keynote speech on the “gray rhino phenomenon” in financial system and the policy response. Li Wenhong, Director of Business Innovation Supervision and Coordination Department of China Banking Regulatory Commission, gave a thematic speech on the development and supervision of FinTech. Sun Xuegong, director of the Economic Research Institute, NDRC, Jing Xuecheng, former deputy director of the Research Bureau of the People's Bank of China, Pei Yonggang, Chief Rating Officer of the Golden Credit Rating International, Zhang Bin, senior researcher of the China Financial 40 Forum, Xu Hao, vice president of the Ant Financial Group, and Wu Ge, chief economist with Huarong Securities respectively delivered speeches and in-depth interpretations on various areas including state-owned enterprises leverage, real estate, local government debt, external shock, Internet finance, and debt cycle, etc.


In his speech “Actively and Steadily Resolving the Leverage Risk of State-Owned Enterprises”, Sun Xuegong, director of the Economic Research Institute, NDRC, noted that China’s overall leverage ratio is among the medium group of the major economies, but the corporate leverage is at a high level, with the state-owned enterprise’s leverage ratio significantly higher than those of other enterprises. Sun Xueong analyzed the causes of high leverage of state-owned enterprises, and pointed out that China’s leverage risk would not materialize as a short-term outbreak of debt crisis, but instead would take its toll on the long-term economic growth potential. China will need to accelerate the deleverage of state-owned enterprises, enforce market discipline, speed up the resolution of zombie enterprises, optimize the distribution of state-owned enterprises, recapitalize the viable enterprises through debt-equity swaps and equity financing, and explore the establishment of state-owned capital supplement mechanism.


Pei Yonggang, Chief Rating Officer of the Golden Credit Rating International, made a speech on “Strengthening the Local Government Debt Control” and presented the characteristics of the local government debt risks. He noted that the appropriate response to local government debt risk can include six measures: to strictly distinguish between local state-owned enterprises debt and local government debt, to develop more varieties of project income bonds and special bonds, to promote PPP projects in an appropriate way, to introduce more long-term funding providers, to establish a governmental financing guarantee fund, and to give full play to the role of China’s credit rating agencies.


Zhang Bin, senior researcher of the China Financial 40 Forum, analyzed the correlation between Federal Reserve benchmark rates and China’s macroeconomic indicators, and interpreted the current capital flows and exchange rate fluctuations. Zhang Bin pointed out that China’s economy has entered a territory characterized as medium-speed growth, low inflation, huge trade surplus, no serious external economic crisis, generally controllable domestic financial risks, and lower foreign debt level. From international experience, the probability of a large depreciation of RMB in this context is very low. Zhang Bin believed that the magnitude of impact of external shocks lies in how China responses, while giving full play to the market mechanism is the fundamental means to deal with the unexpected situations.


Jing Xuecheng, former deputy director of PBC Research Bureau and President of China Real Estate Finance Research Institute, elaborated on the issue of real estate sector risk solution. As he noted, the policy changes observed in the Nineteenth CPC National Congress include adherence to the residential nature of house instead of speculation, and the acceleration of the establishment of housing mechanisms characterized as multi-source supply, multi-channel protection and rent & purchase promotion concurrently, with the purpose of serving all people’s housing needs.


Xu Hao, vice president of the Ant Financial Group, gave a speech on “Internet financial risk prevention”. In his opinion, the nature of the Internet finance is finance. Although it provides service in a special way, but it has not exceeded the financial risk category. He analyzed the main characteristics of Internet financial risk from four dimension----technology, information, service and customer----and introduced the practical experience of Ant Financial Group in risk prevention and control. He said that China’s Internet financial industry, currently a global leader, should further consolidate its advantages including by encouraging technology innovation and application, while the market participants should continue to enhance their risk awareness, strengthen self-discipline, and make full use of technological means to prevent and resolve risks.


Wu Ge, chief economist with Huarong Securities, gave a speech themed “a new perspective on debt cycle”, which looked into the short-term and long-term impact of the high debt level. In the long term, as Wu Ge said, a high debt level means a future deflation induced by elevated debt remains a threat. In the short term, thanks to the combined effects of supply-side reform, financial deleveraging and real estate regulation in the past six months, China’s debt accumulation ​​has been showing signs of a marginal slowdown, which will put a lagged downward pressure on PPI and other prices during the next six months.


In the round table discussion session of “Focus on the Liquidity Risk and Credit Risk”, Yu Chunjiang, Deputy Director of Golden Credit Rating International, Liu Xiaolei, Director of Finance Department of Guanghua School of Management, Peking University, Su Jin, Vice Senior Manager of Financial Market Department, China Construction Bank, Wen Bin, Chief Researcher with China Minsheng Bank, Qu Qing, General Manager of Asset Management Department of Huachuang Securities carried out an in-depth discussion on the financial system liquidity risk and credit risk development, prevention and resolution.



    Publish on :10/26/2017 14:02
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