China increases the supply of policy based finance

Increase the supply of policy finance, grasp the main line of serving the national strategy, control the boundary between policy finance and commercial finance, and adhere to the bottom line of risk prevention and control

The Central Financial Work Conference held last year proposed to strengthen the functional positioning of policy oriented financial institutions. Policy finance is a financial form that relies on sovereign credit or multilateral credit, with the aim of achieving public policies or strategic goals of a country, region, or even the world. Policy based financial institutions have their unique advantages and are an important component of China's financial system.

Policy finance mainly focuses on medium and long-term loans, and does not aim to maximize profits. It has natural advantages in supporting inclusive, livelihood, green projects, and infrastructure construction. At the same time, policy finance has accumulated rich professional experience in supporting the construction of national strategic major projects and implementing major regional development strategies, and can comprehensively consider national strategy, public interests, project feasibility, and potential risks. Increasing the supply of policy based finance and giving better play to the role of policy based finance can not only provide more powerful financial support for the real economy, but also help all kinds of financial institutions to properly position themselves and promote the formation of a multi-level, widely covered and differentiated modern financial institution system.

Increasing the supply of policy based finance is not blind and disorderly expansion, but to further improve the supply quality and give more accurate and effective play to the advantages of policy based finance on the premise of strengthening the function orientation.

To increase the supply of policy based finance, we should seize the main line of serving the national strategy. To strengthen the functional positioning of policy finance, it is necessary to further focus on the main responsibility and business, focus on serving national strategies, and focus on accurately allocating valuable financial resources to the strategic direction, key areas, and weak links of high-quality development. For example, we should strengthen financial services for key core technology research, strategic emerging industries, and high-tech manufacturing industries, strengthen services for green and low-carbon development, regional coordinated development, and comprehensive rural revitalization, provide high-quality services to jointly build the "the Belt and Road", and serve to build a modern infrastructure system.

To increase the supply of policy based finance, we should make a good distinction between policy based finance and commercial finance. In recent years, there has been some overlap and overlap between the functions of policy financial institutions and commercial financial institutions, leading to competition with commercial banks in infrastructure construction, major high-quality projects, and other aspects. This not only hinders the performance of their respective functions, but also easily leads to policy arbitrage, moral risks, and so on. Therefore, it is necessary to further clarify the boundaries of policy based financial services, adhere to the principle of maintaining principal and minimizing profits, and focus on "businesses that commercial finance cannot do or cannot do well.". For example, commercial banks have strong pro economic cycle characteristics, and policy banks should strengthen their role in countercyclical regulation to better assist the country in macroeconomic regulation. In addition, in some industries that are in line with the national strategic direction but have not yet matured in the market, policy finance can complete market incubation through leading fund support, laying a solid foundation for attracting commercial banks and social capital to enter. Of course, on the basis of clarifying the boundaries, policy finance should also strengthen complementary advantages and collaborative cooperation with commercial finance, and leverage more financial resources to support key areas and weak links through various means such as syndicated loans.

To increase the supply of policy based finance, we must adhere to the bottom line of risk prevention and control. On the one hand, we need to improve the capital replenishment mechanism, strengthen refined management, and achieve our own financial balance and sustainable development; On the other hand, it is necessary to enhance the ability to prevent and resolve risks in key areas, and establish a sound long-term mechanism for risk prevention and resolution in supporting the prevention and resolution of local debt risks.

China has shifted towards a stage of high-quality development, with multiple advantages and conditions for continued development. However, the problem of imbalanced and insufficient development remains prominent. Policy finance should firmly grasp the role of assisting in solving imbalanced and insufficient development problems, focus on its main responsibilities and businesses, strictly adhere to business boundaries, and make new and greater contributions to building a new development pattern and promoting high-quality development.