Preventing and defusing risk in the financial sector

Prior to this year's Two sessions, Chinese President Xi Jinping gave a speech at an intra-Party seminar for senior officials, in which he talked about preventing and defusing major risks in a wide range of sectors. Among them, the financial risks bore the most attention during this year's Two sessions. But what are those current risks?

How did some of the policies at the Two sessions this year address them? Shang Fulin, director of the Economic Committee of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), has made a detailed analysis of financial risks in the past few years. Besides, he also illustrated the efforts of the central government as well as the measures that should be carried out in the future.

According to Shang, preventing and defusing financial risks is one of the three tough battles for China in 2018. So far, China has done a lot to control financial risks. For example, the government curbed the risks that appear regularly. Some significant risks were controlled before they became a major issue.

From Shang's perspective, the current financial risks can occur in one of the following fields: Credit, illegal lending and fund-raising, and specific sectors, such as in real estate. As for the credit risk, China now employs holistic management to control such financial risks. When it comes to the illegal lending and fund-raising, Shang suggested emphasizingthe relevant risks to let people know their negative influences. Moreover, reducing high-risk institutions, shrinking businesses and standardizing operation should also not be overlooked in risk defusing.

As the risks have the potential to turn into damage, Shang emphasized precautions. He maintained that all levels of government, including the central government, should stick to the bottom line and guard against systemic financial risks so as to eliminate these risks before they crop up. In the end, Shang also expressed his confidence that China could better deal with these risks and get them under control by constantly improving financial systems and increasing understanding about financial risks.