21st Century Business Herald: 

The 19th CPC National Congress called for moves to forestall and defuse major risks as one of the three tough battles. What progress has been made in forestalling and defusing major financial risks, and what will be done next? Thank you.

Chen Yulu: 

Thank you for your questions. Mr. Han just mentioned that the past decade is one in which our country has substantially coordinated development and security. The CPC Central Committee has attached great importance to forestalling and defusing major financial risks. Since the 18th CPC National Congress, General Secretary Xi Jinping has made a series of important arrangements for preventing and defusing major financial risks from the strategic perspective of the overall economic and social development. The 19th CPC National Congress urged efforts to prevent and defuse major risks. Under the strong leadership of the CPC Central Committee and the State Council, and guided by the Financial Stability and Development Committee under the State Council, the People's Bank of China worked together with relevant departments and local governments to make all-out efforts to prevent and defuse financial risks in line with the fundamental principles of "maintaining overall stability, ensuring coordination, implementing category-based policies, and defusing risks through targeted efforts." Through concentrated efforts, the risk points accumulated over a long period of time in the country's financial system have been effectively dealt with, and overall financial risks have been reduced and generally controllable. Following are several important signs.

First, the financial system has effectively supported the overall macroeconomic stability. Focusing on stabilizing economic growth, stabilizing commodity prices, promoting employment stability, and stabilizing the international balance of payment, we adopted a prudent monetary policy, implemented the monetary policy in a scientific manner, introduced a number of structural monetary policy tools, ensured the market plays the decisive role in setting the exchange rate of RMB, ensured the foreign exchange reserve generally remains stable, to create a favorable monetary and financial environment for increasing support and effective services for the real economy.

Second, our country's financial system has remained generally stable. The resilience of financial institutions' operations and their anti-risk ability have improved significantly. For example, by the end of 2021, the proportion of assets of our country's commercial banks within the safe boundary is 98.9%. Among them, the rating of 24 large commercial banks have been good, and some banks are leading the international level in terms of key operating indicators, playing a key role in consolidating the foundation of the financial system. China's A-share market has withstood multi-round, multi-factor tests of external shocks, and the bond market has broken down rigid payments in an orderly manner with its overall smooth operation. 

Third, the financial risks of key institutions and in key areas have been steadily defused. In accordance with the principle of marketization and the rule of law, we have defused the risks of key high-risk enterprises and groups and financial institutions through targeted efforts, and the number of high-risk medium and small financial institutions has fallen sharply. Meanwhile, we have also comprehensively overhauled and rectified the financial order. The chaos of shadow banking, which was of great concern to the public, has been effectively remedied. Nearly 5,000 P2P online lending institutions have been closed; a campaign to address risks related to internet finance was completed; 25,000 cases of illegal fundraising were filed and investigated, and all financial services of internet platform enterprises were brought under supervision. We have implemented the system for prudential financial regulation for the real estate sector in a prudent and orderly manner, and the tendency of financialization and bubbles in the property market have been effectively contained. Meanwhile, hidden debt risks of local governments have been defused prudently.

Fourth, progress has been made in establishing a long-term mechanism for risk prevention and control. We improved the financial legal system, advanced the coordinated financial regulation between the central government and local governments, and established a system of macroprudential management and deposit insurance system. Meanwhile, we resolutely punished corruption behind financial risks, dereliction of duty in the supervision and criminal offenses. 

Preventing and defusing financial risks is the eternal theme of financial work. Next, the PBC will attach equal importance to risk prevention and defusing and the building of long-term mechanisms; attach equal importance to financial risk response and anti-corruption, recovering illicit assets and retrieving losses; attach equal importance to improving the effectiveness of regulation and reform, innovation, and development; continue to do a good job in preventing and defusing risks; and forestall systemic risks. Thank you.