Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  News  >  Economy & Forex  >  All News

News : Economy & Forex
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance ProfessionalsCalendarSectors 
All NewsEconomyCurrencies / ForexCryptocurrenciesEconomic EventsPress releases

China needs to change way it finances economy, think tank says

share with twitter share with LinkedIn share with facebook
share via e-mail
0
09/22/2019 | 05:23am EDT
FILE PHOTO: A clerk counts Chinese 100 yuan banknotes at a branch of a foreign bank in Beijing

HANGZHOU, China (Reuters) - China needs to develop a better system for financing small businesses that drive innovation in the economy but currently struggle to access the funds they need for growth, a leading Chinese think-tank said in a report published Sunday.

China's economic development over the past 40 years has taken place through a financial system that has high government intervention and is "absolutely dominated by banks", the China Finance 40 Forum said in an annual report.

Such a model, however, tends to distort financial resources in favor of large companies, the report said. That comes at the expense of smaller firms, which are the main drivers of innovation in the economy but usually lack the necessary assets for collateral or government guarantees to secure finance for growth.

Financial regulators have also failed to prevent certain financial risks, the report said.

The current financial system "is clearly not well suited to the core task of current high-quality economic development. Therefore, an important task of financial reform should be to adjust the financial structure," the report said.

China Finance 40 Forum is a think tank that focuses on economics and finance policy research and comprises members from regulators, universities and financial institutions.

China's reliance on technological innovation for future economic growth has made changing the structure of the financial system an urgent matter, said Huang Yiping, the report's leading author and a professor of economics at the National School of Development of Peking University.

Policymakers need to develop a multi-layered financing structure and reduce control over capital markets to open funding channels for innovative firms, Huang said.

Only about 10% of total financing for Chinese companies comes directly from the financial markets, well below 43% for the United States and 23% for Britain, Huang said.

Banks should be encouraged to link small and medium enterprises (SMEs) with the country's capital markets, said Yang Kaisheng, a consultant for the think tank and former president of China's largest lender Industrial and Commercial Bank of China. Yang said there was also a need to set up a policy bank focused on SMEs involved in technology and innovation.

Policymakers should also temper their current crackdown on shadow banking, it added.

Though loosely regulated, the shadow banking sector serves as a supplement for traditional lending methods, said Xiao Gang, a senior researcher at the think tank and former chairman of China's securities regulator.

(Reporting by Leng Cheng and Ben Blanchard; Editing by Sam Holmes)

Stocks mentioned in the article
ChangeLast1st jan.
BANK OF CHINA LIMITED 0.82% 3.67 End-of-day quote.-0.28%
INDUSTRIAL AND COMMERCIAL BANK OF CHINA 1.42% 5.72 End-of-day quote.5.29%
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news "Economy & Forex"
04:49aGlobal stocks slip amid lack of detail on trade deal
RE
04:48aSAUDI ARAMCO IPO ANNOUNCEMENT DUE 'VERY VERY SOON' : chairman
RE
04:40aUK's Javid plans first post-Brexit budget on November 6
RE
04:32aChina auto sales fall in 'Golden September' as turnaround hopes fade
RE
04:31aWFTU WORLD FEDERATION OF TRADE UNIONS : Delegation of FUCLAT-PANAMA visits the WFTU Central Offices in Athens, Greece for an official meeting with the WFTU General Secretary and Trade Union Seminars
PU
04:26aUK stocks recoil as Brexit euphoria cools; Sophos soars
RE
04:26aNO : 319/19, Foreign Minister Elmar Mammadyarov met with the Minister of Foreign Affairs and Trade of Hungary, Péter Szijjártó on the sidelines of the 7th meeting of the Council of Foreign Ministers of the Cooperation Council of Turkic Speaking States held in Baku
PU
04:20aGUS CENTRAL STATISTICAL OFFICE : Foreign trade turnover of goods in total and by countries in January-August 2019
PU
04:20aLEGALLY MANDATED INFORMATION TO CONSUMERS : necessary, but not always sufficient
PU
04:19aCENTRAL BANK OF HUNGARY : MNB and EBRD to jointly organise international conference on green finance
PU
Latest news "Economy & Forex"