On May 18th, at the International Conference on “Sharing the Future: Building an Open and Inclusive Economic and Financial System” and the 2025 Tsinghua PBC School Global Finance Forum, Ding Zhijie, Director of the Institute of Finance of the People’s Bank of China, officially released the “China Financial Policy Report 2025” (hereinafter referred to as the “Report”). This year’s Report focuses on the continuous deepening of financial system reform and the accelerated construction of a financial system with Chinese characteristics. It analyzes the current challenges and opportunities facing China’s financial development, outlines the path of financial development with Chinese characteristics, and reviews the construction of the six core components of the financial system in 2024. The Report also provides prospects for future financial system reform in areas such as reform, supervision, and opening up.
Current State of China’s Financial Reform
Ding Zhijie highlighted that China’s financial reform is at a new and important juncture, facing a severe and complex external environment. Intensified global economic fluctuations, the reconstruction of the international trade order, rising geopolitical risks, and potential future pressures from US tariff policies on the monetary and financial fields all present new challenges. In the realm of financial security and regulation, regulatory reforms in the United States and the development of digital currencies pose threats to the stability of the global financial system and traditional finance. The technological revolution is also accelerating the reshaping of the financial competition landscape.
Domestic Economic Challenges and Opportunities
Domestically, China faces challenges such as unstable domestic demand, difficulties in employment and income growth, operational challenges for enterprises, and local fiscal issues. Risks in the transformation of old and new growth drivers need to be managed, and financial risks in the real estate sector, local government debts, and small and medium-sized financial institutions remain prominent. However, unswervingly following the path with Chinese characteristics also brings new opportunities for the development of China’s financial system, Ding Zhijie noted.
Review of 2024 Financial System Development
The Report reviewed the achievements of 2024, highlighting progress in all six core components of China’s modern financial system with Chinese characteristics. Ding Zhijie emphasized that the financial regulatory system has made steady progress, strengthening counter-cyclical and cross-cyclical regulation. Various tools have been comprehensively applied to support social financing and the growth of money and credit, maintaining the bottom line of financial security. The financial market system has become increasingly mature, with a more rational structure. Reforms in the bond and stock markets have deepened, green bond issuance has accelerated, and the STAR Market and the Growth Enterprise Market have developed well. The financial institution system operates through division of labor and collaboration, with various institutions leveraging their respective advantages to promote the entry of long-term funds into the market. Financial regulation has enhanced its effectiveness through institutional restructuring, improved regulatory rules, and widely applied technology. The financial product and service system, guided by the “Five Major Articles of Finance,” has optimized its structure and continuously innovated services across various fields. The software and hardware of financial infrastructure have advanced in a coordinated manner, expanding applications, enhancing service coverage, and accelerating global connectivity.
Future Directions for Financial System Reform
Ding Zhijie outlined five key areas for the continuous deepening of financial system reform in the future. First, optimize the allocation of financial resources and maintain a stable financial environment. Second, accelerate the improvement of the central bank system and smooth the transmission mechanism of monetary policy. Third, consolidate financial stability guarantees by strengthening supervision, promoting the construction of a regulatory catch-all mechanism and early correction system, enhancing coordination between macro and micro prudential measures, incorporating all financial activities into legal supervision, and improving the division of regulatory responsibilities between the central and local governments. Fourth, adhere to the essence of finance and improve the quality and efficiency of financial services. Fifth, promote high-level opening up of the financial sector and accelerate the building of a financial power.
Leadership and Future Outlook
The Third Plenary Session of the 20th Central Committee of the Communist Party of China and the Central Economic Work Conference have made systematic arrangements for the reform of the financial system. Ding Zhijie emphasized the importance of adhering to the leadership of the Central Committee of the Communist Party of China, balancing development and security, continuing to deepen reforms, accelerating the building of a modern financial system with Chinese characteristics, and supporting the all-round advancement of modernization with Chinese characteristics.
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