CCTV:
This year is the last year for the three tough battles on risk management, poverty reduction and pollution control. What did the CBIRC do last year to guard against and defuse major financial risks? And what are the plans for this year? Thank you.
Huang Hong:
Thank you for your questions. I'll answer them. In 2019, the CBIRC carefully implemented the decisions and plans made by the CPC Central Committee and the State Council. We continued to enhance financial regulation, resolutely rectified unlawful market practices, and carefully tackled major risks. We have achieved a balance between stable growth and risk control, and won the crucial war of guarding against and defusing financial risks. Generally speaking, we have accomplished the following:
First, we have placed effective controls on credit default risks and increased our efforts to identify and address non-performing loans. In 2019, the total value of non-performing loans we handled hit 2 trillion yuan. All loans that remained unpaid 90 days after their due date in commercial banks had been regarded as non-performing loans. We have also steadily reduced enterprise debt risks. We established the creditor committee mechanism, with approximately 19,200 creditor committees set up nationwide. The total amount of market-based swapping of debt has reached 1.4 trillion yuan. Overall, these measures have helped enterprises reduce their leverage and debts and increase their profits.
Second, we continued to dismantle high-risk shadow banking. We further standardized interbank, finance, off-balance sheet and trust businesses; reviewed and cut financial assets with complex structure, tending to divert from the real economy, or involving contagion risks. As a result, risks from shadow banking and cross-industry financial businesses have continued to diminish. Over the past three years, the size of shadow banking dropped by 16 trillion yuan from its historical peak.
Third, we effectively managed risks in the online lending industry. Risks in the online lending industry have declined dramatically. By the end of 2019, China had 248 online lending agencies in operation, a decrease of 76% from the beginning of the year. The number of agencies and borrowers as well as the debit balance all fell for 18 consecutive months.
Fourth, we made consistent efforts to address acute problems in the financial sector. The number of problems in the market have fallen steadily, and any increases have also been effectively contained. A number of major illegal fund-raising cases have been severely investigated and dealt with. We have also intensified our oversight and accountability mechanisms. Last year, we punished 2,849 banks and insurance agencies, held 3,496 responsible officials to account, and handed out a total of 1.45 billion yuan in fines and confiscations.
Fifth, we gradually dealt with troubled financial institutions. The CBIRC, in collaboration with the People's Bank of China, took over control of Baoshang Bank, and steadily pressed ahead with the restructuring and risk mitigation of Hengfeng Bank and the Bank of Jinzhou.
Sixth, we resolutely curbed the financialization and any potential bubbles in the real estate market. We investigated and punished the illegal flow of banking and insurance funds into the real estate sector. Consequently, the growth rate of real estate loans has decreased by 3.3 percentage points year on year.
Huang Hong:
2020 is the final year for us to finish the building of a moderately prosperous society in all respects and complete the tasks set out in the 13th Five-Year Plan. 2020 will also be a year for the decisive victory against financial risks. The CBIRC will continue to guard against risks as planned, make efforts to win the hard battle against potential risks with determination, and adhere to the bottom line of preventing systemic risks. The following are the tasks that are high on our agenda this year.
First, we will properly deal with high-risk institutions, enhance accountability of various parties, do a good job on coordination, cooperation and policy guidance, as well as optimize the recovery and resolution mechanism of banking and insurance agencies.
Second, we will continue to dismantle shadow banking and significantly reduce high-risk businesses to prevent its resurgence.
Third, we will strengthen the supervision over the quality of assets, continuously increase penalties for non-performing assets, and improve the accuracy of asset classification.
Fourth, we will firmly implement policies to contain housing market speculation, strictly observe regulatory rules such as the management of credit risk concentration, and prevent the illegal flow of credit funds into the real estate market, as well as continue to curb its financialization and any potential bubbles that may emerge.
Fifth, based on the premise of national stability, we will severely punish or prosecute activities of financial groups that were illegally established that are in violation of laws and regulations. We will also manage their liquidation well, retrieve illicit money and losses, as well as promote their reform and restructuring.
Sixth, we will push forward the campaign against online lending and do a good job in disposing their existing assets. We will also ensure that closed financial institutions exit the market or transform themselves into other businesses, as well as enhance regulations on online insurance.
Seventh, we will continue to work together with local governments to deepen the reform of state-owned enterprises, accelerate economic restructuring, and defuse hidden debt-related risks.
Eighth, we will guard against and defuse external risks, step up stress tests for banking and insurance agencies, and improve our response plans to stabilize market expectations.
Ninth, we will further strengthen weaknesses in regulation by promoting the use of supervision technologies, speeding up the building of a regulatory big data platform, improving regulatory systems, and enhancing the ability of regulatory officials to impose stronger and more effective regulation. Thank you.
