China will step up the Communist Party's leadership of its $61 trillion finance industry and strengthen efforts to reduce local debt risks, state media reported, citing a key twice-a-decade financial policy meeting that was held October 30-31.
China will uphold the centralized and unified leadership of the Communist Party on financial work, the Central Financial Work Conference held in Beijing was quoted as saying.
The gathering, attended by Chinese President Xi Jinping and Premier Li Qiang, said China would set up a mechanism for resolving local debt risks and managing local government debt.
It will also help with reasonable financing demands for all types of property enterprises and pursue policies that aim to meet housing demand, the conference was quoted as saying.
China will "persist in taking risk prevention and control as the eternal theme of financial work," it was quoted as saying. "We should be aware that all kinds of contradictions and problems in the financial field are intertwined and influence each other, some of which are still very prominent, and there are still many hidden … economic and financial risks."
Chinese leaders are trying to revive the economy and fend off potential financial risks from a property slump and 92 trillion yuan ($12.6 trillion) in local government debt, including debt of local government financing vehicles.
"The property sector slowdown and the LGFV debt problem lead to rising risks in the financial system," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.
"The government will likely tighten financial regulation in the next five years to prevent systemic crisis."
First held in 1997, the meeting, previously known as the national finance work conference, is closely watched for its impact on the development of China's financial system, setting the direction for major reforms over the next five years.
The conference, usually held once every five years, did not take place in 2022. The last one was in 2017.
In March, China unveiled a sweeping shake-up of its financial regulatory regime, including a plan to set up the Central Financial Commission to tighten the party's grip on the financial sector.
China will improve the mechanism of the party's leadership in financial work, with the Central Financial Commission playing its role, the conference was quoted as saying.
China will also guard against systemic risks and put all kinds of financial activities under supervision, it said.
It will maintain a prudent monetary policy, enrich its monetary policy toolkit, allocate more financial resources to promote technological innovation, advanced manufacturing, green development and small firms, and keep the yuan exchange rate at a reasonable and balanced level.
Additionally, China will strengthen its capital market hubs, develop diversified equity financing and improve the quality of listed companies, it said.
