Editor’s note for June 1, 2023
A note for Access newsletter readers from Jeremy Goldkorn.
Finance
As of 2020, the Chinese banking system’s total assets reached nearly 310 trillion renminbi (over $40 trillion), the highest in the world. The country’s gargantuan finance sector comprises the finance, securities, and insurance industries. The sector is regulated by the China Banking and Insurance Regulatory Commission (CBIRC), as authorized by the State Council in 2018.
Finance and Securities
China’s financial sector has undergone a tremendous transformation in the first two decades of the 2000s, with banks increasingly allowed to operate more like their Western counterparts. However, China’s four biggest banks — the Industrial & Commercial Bank of China, the China Construction Bank, the Agricultural Bank of China, and the Bank of China — remain wholly or mostly state-owned and headquartered in Beijing.
Under the current 14th Five-Year Plan, China plans to continue to develop its digital economy and aims to boost core industries’ GDP contribution to 10% by 2025. To that end, CBIRC has advised banking and insurance institutions to implement “supportive digital development plans” such as improving data governance systems, enhancing data security, and improving privacy protection. Furthermore, China’s central bank has also been piloting a government-issued digital RMB. Through its Digital Currency Electronic Payment (DCEP), the government plans to integrate the digital RMB into both its domestic and overseas societies to achieve real-time transactions in multiple jurisdictions, and be operational 24/7. China’s rapidly digitized economy could reduce dependency on intermediaries during cross-border transactions and even co-exist with or substitute the SWIFT system in the near future.
Besides digitizing its economy, China is also strengthening green finance capabilities to achieve carbon neutrality in a gradual and orderly manner. Banks and insurers are required to enhance their lending and investment policies to support energy saving and green growth in key sectors and fields while also promoting the application of green and low-carbon technologies. As of 2022, large state-owned commercial banks such as the Bank of China, China Construction Bank, and Agricultural Bank of China account for over half of Chinese green lending. Meanwhile, small and mid-size banks such as Bank Of Hangzhou and Shanghai Pudong Development Bank are still developing business development strategies and implementation mechanisms to bolster their support of green finance capabilities.
At the same time, China is actively improving its market mechanisms, such as easing the public listing process to encourage the development of angel and venture capital investments. Since it is also the second-largest bond market globally, it continues to broaden the range of fixed-income products. While domestic-labeled green bond issuance has exceeded 1.5 trillion yuan in 2021, regulators are also monitoring the increasing trend of bond default and developing mechanisms to tackle the situation.
Insurance
As of 2021, the total assets in China’s insurance industry amounted to 24.9 trillion yuan (about $3.91 trillion). The insurance industry includes multiple sub-categories, including:
- long-term care insurance
- commercial, medical insurance
- agricultural insurance
- natural disaster insurance
- critical illness medical insurance
- basic medical insurance
- basic pension insurance
- unemployment insurance
- work-related injury insurance, deposit insurance
- public service platforms for social insurance
These sub-categories have been identified in the 14th Five-Year Plan as key economic and social developments to cater services to its expanding middle-class, tackle China’s gradually aging society, and ensure a maturing capital market.
Further Opening-up
Given China’s integration with international trade, the growing influence of the renminbi, and the vast potential within China’s enormous savings in the form of bank deposits, China’s financial intermediation sector has a huge influence over risk-free interest rates, exchange rates, and risk premiums globally. According to the 14th Five-Year Plan, China is committed to further deepening the connectivity between its domestic and overseas financial markets. It also plans to expand connections between the financial markets in Mainland China, the Hong Kong Special Administrative Region, and the Macau Hong Kong Special Administrative Region.
All companies in Finance
-
- Company name
- Revenue
- Assets
- Employees
Are we missing something?
Request A Company Profile
News on China Finance companies
Can Alibaba’s six-ring circus succeed?
In its first earnings call following a restructuring prompted by regulatory pressures and investor expectations, Alibaba is signaling a shift toward financial optimization. But can it restore investor confidence and keep the government happy?
How did UnionPay become the global debit card king?
New research shows that the Chinese bank card giant is now the world’s biggest provider of debit cards, ahead of Visa and Mastercard.
