Focusing on “newness”, China’s financial industry helps empower new productive forces_1

On October 27, the 2024 Financial Street Forum Annual Meeting and the 2024 SWIFT International Banking Operations Conference took place consecutively in Beijing, with a key focus on how finance can boost the development of new quality productivity.

Developing new quality productivity is seen as an essential requirement and significant focal point for promoting high-quality growth. Finance serves as the lifeblood of the national economy and is a critical component of a nation’s core competitiveness, playing a vital role as an accelerator and catalyst in the cultivation of new quality productivity.

As China advances in building a robust financial framework, there is a pressing need to enhance financial strategies, align efforts to improve quality and empower industries, and accelerate the growth of new quality productivity.

Li Yunze, the head of the National Financial Supervisory Administration, emphasized at the forum the importance of fostering patient capital to support the development of new quality productivity. He encouraged financial asset investment companies to play a larger role in supporting technological innovation. Notably, a new batch of 18 pilot cities has signed agreements with a total fund size exceeding 250 billion yuan. Additionally, there is support for qualified insurance institutions to establish private equity funds to increase market stability.

Zhang Jian, Vice Chairman and General Manager of Shenwan Hongyuan Securities, stated that securities firms should focus on better serving the high-quality development of the real economy. He highlighted the need to actively promote capital markets that offer service models aligned with new quality productivity, providing high-quality investment banking services across the entire lifecycle of enterprises to assist in optimizing and upgrading industrial structures.

Yin Zhongli, a counselor at the State Council and a researcher at the Financial Research Institute of the Chinese Academy of Social Sciences, noted that when traditional funding sources like credit and fiscal support fall short for disruptive innovations, venture capital and private equity can effectively aid small and micro enterprises in completing technological transformations. He sees capital markets as essential to fostering disruptive innovation with unique mechanisms for risk diversification, effectively distributing the risks and costs of developing new technologies.

Moreover, capital markets can incentivize innovative companies to increase their R&D investments and facilitate industrial upgrades through measures such as valuation pricing, talent incentives, and mergers and acquisitions.

As the capital market plays its role, the banking sector also has significant opportunities. According to reports, to accommodate the asset characteristics of technology-driven companies, the Agricultural Bank of China’s Shanghai branch has introduced various products like batch loans, agricultural loans, and innovation loans. They are responding flexibly to the unique needs of enterprises through personalized financing options, making intangible assets tangible to provide more diverse financial services to technology companies pursuing ambitious goals.

Among these services, the “Agricultural Loan” specifically supports new sectors such as biotechnology breeding and manufacturing, focusing on agricultural technology enterprises in Shanghai. This product features a comprehensive range of offerings, low entry thresholds, large credit limits, extended terms, multiple types of collateral, and favorable credit conditions, effectively addressing the financing challenges faced by agricultural tech companies.

Insurance, as a foundational aspect of the modern market economy, empowers through risk mitigation, capital aggregation, and efficiency improvement. Bu Fanwei, Deputy Director of the Property Insurance Regulatory Department at the National Financial Supervisory Administration, shared that the Chinese insurance industry has made significant strides in supporting high-quality industrial development, particularly in technology innovation, green transformation, and development in rural and micro-enterprise sectors.

Official data reveals that from January to August of this year, insurance premiums related to technology reached 38.8 billion yuan, providing risk protection exceeding 7 trillion yuan for technological research, development, and application activities.

Liu Yong, Director of the Internet Financial Research Institute at Zhongguancun, pointed out that financial empowerment of industries leading high-quality development requires keeping pace with the digital economy. He called for continuous innovation in financial service models and increased support for technology-driven enterprises, especially small and medium-sized enterprises. In this digital economy context, the financial industry must integrate more deeply into the entire ecosystem of the real economy while tailoring innovative financial solutions to match the development characteristics of local economies.