China Releases 12th Five-Year Plan for the Financial Industry

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Sept. 20 – With the aim to improve the financial system and promote the continued healthy development of the financial industry, China’s State Council released the “12th Five-Year Plan for the Development and Reform of the Financial Industry (hereinafter referred to as the ‘Plan’)” on September 17, which has been jointly formulated by the People’s Bank of China, the China Banking Regulatory Commission, the China Securities Regulatory Commission, the China Insurance Regulatory Commission and the State Administration of Foreign Exchange.

The Plan consists of nine chapters, the first chapter illustrates the main achievements of the development and reform of the financial industry during the 11th Five-Year Plan period, and guidelines, major objectives, policies as well as measures for such development and reform during the 12th Five-Year Plan period. From the second chapter to the eighth chapter, the Plan lists out the key tasks for the 12th Five-Year Plan period in terms of seven aspects, specifically:

  • Improvement of financial control
  • Optimization of organizational system
  • Development of the financial market
  • Deepening of financial reform
  • Expansion of opening-up
  • Maintenance of financial stability
  • Consolidation of infrastructure

Chapter nine puts forward the guarantee system for the implementation of the Plan. Some of the main achievements and key development objectives are listed below.

Main achievements

During the 11th Five-Year plan period, the overall competitiveness of financial institutions improved significantly. The total assets of the banking, securities and insurance financial institutions amounted to RMB101.36 trillion (a 158 percent increase from the end of 2005), among which:

  • Total assets of financial institutions in the banking industry reached RMB94.26 trillion (a 152 percent increase from the end of 2005)
  • Average capital adequacy ratio stood at 12.2 percent
  • Provision coverage ratio of commercial banks reached 217.7 percent
  • Total assets of the securities industry amounted to RMB2.05 trillion (a 583 percent increase from the end of 2005)
  • Total assets of insurance industry institutions achieved RMB5.05 trillion (a 230 percent increase from the end of 2005)

Development objectives by 2015

Maintaining steady and moderate growth in total finance volume

During the 12th Five-Year Plan period, the added value of the financial services industry shall take up around 5 percent of GDP, with the scale of social financing maintaining moderate growth.

Achieving significant progress in financial restructuring

By the end of the 12th Five-Year Plan period, the direct finance of non-financial enterprises shall occupy above 15 percent of the total social financial scale.

Further enhancing the basic market role in financial resource allocation

Progress shall be achieved in the reform of market-oriented interest rates, with the formation system of RMB exchange rate further improved.

Deepening the reform of financial institutions

Significant development shall be achieved in the modern enterprise system for large financial institutions, with the innovation capacity and risk control management greatly improved.

Basically realizing the full coverage of financial services

Support provided to scientific innovation and economic restructuring shall be further intensified.

Achieving overall control of financial risks

The quality and level of capital in major banking financial institutions shall maintain a relatively high standard, the non-performing loan ratio shall be kept at relative low level, and the capacity for risk management control shall be constantly improved.

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