Cover News:
According to data released by the CBIRC, China's shadow banking sector shrank by 4.2 trillion yuan last year. What is the current size of shadow banks? What new measures will the CBIRC take to continue dismantling shadow banks? Thank you.
Guo Shuqing:
Shadow banking was once a serious financial risk for China, which peaked in 2016. Around 25 trillion yuan's worth of risky shadow banks were dismantled in the past five years, but there is still about 29 trillion yuan. The so-called risky shadow banks actually provide loan products, which were also referred to as "quasi-credit" products by industry insiders. There are also other financial products, such as entrusted loans and WMPs, that are not strictly regulated as bank credit. Overall, these risks are completely manageable. In the future, related risks will be gradually resolved from high to low. Take P2P, for example. During the peak period, the transaction volume of P2P reached 2 to 3 trillion yuan each year. Now, the total funds of lenders that have not yet been repaid only stand at over 490 billion yuan. The risk of shadow banks has been greatly reduced.
Of course, as a supervisory department, we will never cease being vigilant because, with the development of the scientific, technological, economic, and financial sectors, there are still many fake "new financial products" and "innovative products." Many are deceptive, even fraudulent products with great risk. So, the CBIRC and all sectors of society should all remain on high alert. Thank you.
The Paper:
According to a meeting of the Political Bureau of the Communist Party of China Central Committee held on Feb. 25, supervision of leading officials and leading groups in the financial sector should be strengthened, and efforts will be made to tackle typical problems such as violations of the central Party leadership's eight-point decision on improving work conduct and the "revolving door." For the CBIRC, what will be done in this regard? Thank you.
Guo Shuqing:
Thanks for your question. All of us here are heads of financial intuitions. The eighth round of disciplinary inspection launched by the CPC Central Committee uncovered various problems in more than 20 institutions in the financial sector, some of which are very serious and need our close attention. I believe that the whole of society is also highly concerned. We will rectify these mistakes in a serious manner, especially violations of the central Party leadership's eight-point decision on improving work conduct that are intolerable. It has been nearly 10n years since the eight-point decision was put forward after the 18th National Congress in 2012. It is very wrong to make such mistakes, and we must resolutely correct them.
You mentioned the "revolving door" problem. There are officials who have left their posts in financial watchdogs, such as in PBOC, CBIRC, CSRC, and SAFE, and then take up jobs in the financial sector or with companies. The key is that there needs to be a clear system to regulate it. We need to watch out as to whether there are direct connections between their two jobs and figure out their specific original and current posts, whether their original government job will make them have improper influence or generate illegitimate benefits for the current job, and whether they have any wrongdoing during their term in the government. We need to investigate and regulate. Earlier, we made some regulations. A former CBIRC employee cannot directly work in an institution that has been regulated by him or has close relations with him. There is a cooling-off period and waiting period after the confidentiality agreement expires. We believe that the system will be more standardized and more rigorous in the future to solve this problem. Thank you.
CRNTT:
It has been three years since the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) was issued. Does the financial sector have any new explorations and breakthroughs in supporting the development of the GBA? Thank you.
Guo Shuqing:
We have been exploring. Mr. Wang is working in Hong Kong; he knows better than us. Mr. Wang, please.
Wang Sidong:
Thank you, Mr. Guo, and this journalist. The construction of the GBA is a major national strategy planned, deployed, and promoted by General Secretary Xi Jinping, and has achieved remarkable results in recent years. The GBA has strong economic vitality and a developed insurance market. There are more than 160 insurance companies in Hong Kong. The depth and density of insurance in Hong Kong rank second in the world. Last year's data has not yet been released. In 2020, Hong Kong's total gross premiums were HK$581.3 billion. There are 25 insurance companies in Macao, and its premium income in 2020 was 26.3 billion patacas. Guangdong is a province that generates huge insurance on the Chinese mainland. Last year, its premium income was 558 billion yuan, accounting for 12.4% of the national market. In May last year, the PBOC and other three ministries and commissions issued a financial support guideline for the development of the GBA, which greatly promoted the interconnection of financial markets and financial infrastructures in the GBA. In September last year, Mr. Guo conducted in-depth research of the GBA and put forward requirements and hopes for the high-quality development of the insurance industry in the GBA. China Taiping is headquartered in Hong Kong. Its headquarters, nine major subsidiaries, and 172 branches are located in the GBA. In 2021, its premiums in the GBA accounted for 23% of the group's total premiums. The GBA has become a strategic highland for the high-quality development of China Taiping.
In 2019, we took the lead in publishing a white paper on China Taiping's participation in the development of the GBA in Hong Kong. With a focus on serving the GBA, we innovated insurance products to promote the interconnection of residents in the GBA and ensure people's livelihoods in Hong Kong and Macao. For example, we innovatively launched cross-border auto insurance for crossing the Hong Kong-Zhuhai-Macao Bridge and established a three-region integrated insurance and compensation mechanism for Guangdong, Hong Kong, and Macao, enabling policyholders to buy insurance of the three places in either of them. In addition, we have also launched exclusive critical illness insurance in the GBA, as well as cross-border medical insurance to provide insurance services for residents of the GBA. In addition, we have cooperated with the Macao SAR government to establish a catastrophe insurance system to provide catastrophe insurance services for small and medium-sized enterprises in Macao.
We also give play to the advantages of the long-term investment of insurance funds to provide financial support for the GBA construction. For example, we launched a HK$10-billion-worth Greater Bay Area Homeland Development Fund together with China Merchants Group, and China Resources Group. We established a 6.5-billion-yuan equity fund of China Taiping Medical Health Industry in Shenzhen at the end of last year. The current investment projects totaled about 50 billion yuan in the area. Last December, we also launched the first high-quality development forum on the insurance industry in the GBA, promoting the international exchanges on the insurance industry in the area.
During the 14th Five-Year-Plan period, we will continue our focus on Hong Kong and Macao and invest in development of the GBA. A three-year action plan was formulated to serve the GBA. We hope to reflect the effects of the insurance industry's services for the construction through implementing the specific projects there. First, pressing ahead with the policies of allowing "Macao vehicles travelling to Guangdong" and "Hong Kong vehicles travelling to Guangdong;" second, cooperating with regulatory departments to conduct cross-border insurance connections; third, participating in and boosting the construction of cross-border insurance service centers. In addition, we will also set up elderly care communities in the GBA and build medical and health scientific industrial park zones of China Taiping. Furthermore, we will actively intensify the function of international risk management centers in Hong Kong and participate in the development of the Northern Metropolis Development Strategy of Hong Kong and set up the Taiping-Hong Kong insurance and scientific innovation fund. Furthermore, we have recently discussed with the Macao Special Administrative Region government the coordinated operation of the Guangdong-Macao Traditional Chinese Medicine Science and Technology Industrial Park in Hengqin.
In addition, we will introduce more global quality resources to the GBA. Last year, we made meaningful attempts, which actively promoted the Belt and Road Initiative, dual circulation, and better the mechanism for Hong Kong and Macao to integrate into our overall development plan. So we are full of confidence in pursuing high-quality development there. Thank you!
