A view of Lujiazui in Shanghai. (GAO ERQIANG / CHINA DAILY)

While China’s major economic indicators have shown marginal improvement amid the COVID-19 epidemic, continued efforts are needed to make the nation’s prudent monetary policy more appropriate and flexible to better serve the real economy, Vice-Premier Liu He said. Liu made the remarks in a letter addressed to the 12th Lujiazui Forum, held in Shanghai on June 18-19.

To better serve economic development, China’s monetary policy should stress countercyclical adjustments, and the credit supply should be kept at an appropriate level while securing reasonable and sufficient liquidity in the market, Liu said. A beneficial balance can be thus sustained between finance and the real economy, he said.

Supply-side reform should be deepened to ensure higher quality development. The monetary transmission mechanism should be improved to cater to the demands of various market entities. More credit should be provided to micro and small enterprises and manufacturing companies, he added. In addition, deepened reform and further opening-up will take place in the financial sector. In this regard, more financial opening-up policies will be introduced to better protect the legal rights of foreign companies in China, Liu said.

The COVID-19 epidemic has not deterred the further opening-up of the Chinese capital market, but rather spurred the same, as the central government has resolved to advance reform and development via further opening-up, said Yi Huiman, chairman of the China Securities Regulatory Commission, at the Lujiazui Forum. The registration-based initial public offering mechanism on the ChiNext board of the Shenzhen Stock Exchange, which started on June 15, was a good example of the opening-up efforts, he said.

Yi said that openness is the fundamental feature of the modern economic structure and a mature financial market. The CSRC will advance the two-way opening-up of the Chinese capital market, he said.

To be specific, the Shanghai-Hong Kong stock connect mechanism will be further optimized, he said. The investment targets under the stock connect programs between Shanghai, Shenzhen and Hong Kong will be expanded further. The businesses under the Shanghai-London stock connect program will be completed. Connectivity programs for exchange-traded funds between China and overseas markets can be experimented within a wider range, said Yi.

The limit on foreign ownership in securities, fund and futures firms has been removed since April 1, which would not otherwise have been lifted till 2021, he said. Industry giants BlackRock Financial Management and Neuberger Berman Investment Advisers LLC became the first two foreign financial service providers to apply for mutual fund qualification in China on the first day when the new policy took effect. Credit Suisse Founder Securities Ltd got the CSRC approval for an ownership change on April 20, following which the number of foreign-controlled securities firms in China rose to six.

The CSRC approved on June 18 the ownership change plan of JPMorgan Futures Company Ltd, making it the first wholly foreign-owned futures company in China.

On March 20, five foreign financial institutions held a joint online opening ceremony in Shanghai, among which were industry big names JPMorgan Securities (China) Co Ltd and Invesco Ruihe (Shanghai) Private Equity Investment Management Co Ltd.

Guo Shuqing, Party secretary of the People’s Bank of China, said at the Lujiazui Forum that Chinese and foreign financial institutions must work together on product design, equity investment, corporate governance and talent training, to facilitate the further opening-up of the Chinese capital market.

The internationalization of the renminbi should also be advanced steadily, expanding the currency’s functions of denomination, settlement, trading and reserves, said Guo. Financial opening-up at the regional level will also be supported, especially in the China (Shanghai) Pilot Free Trade Zone, he said.

Wen Bin, chief analyst at China Minsheng Banking Corp, said that opening-up has been one of the top priorities of China. The country will promote further opening of the financial sector in an orderly manner and allow greater market access for foreign investors to the domestic market and encourage more domestic financial companies to do business in overseas markets.

More reform measures are expected to be released in the country’s foreign exchange management system after China made substantial progress in the reform of its market-oriented interest rate system, Wen said.

“The construction of free trade zones and ports will continue to be improved, the procedure for cross-border trade and investment will be further streamlined,” he added.

According to the State Council’s (China’s Cabinet) decision announced in 2009, Shanghai should grow into an international financial center which is compatible with the country’s economic power and the renminbi’s international status.

As Liu concluded in the letter, Shanghai has already grown into an important driver of China’s economic development. The city is striving to be a new hub of financial opening-up by exploring integration among finance, technology and industries, he said.

Toshiyasu Iiyama, head of the China Committee at Japanese financial institution Nomura Holdings, said that Shanghai has one of the most vibrant financial markets in the world and has become an international financial center by developing a multilayered primary market for securities, including one where it is easy for innovative companies to raise money in early stages of their life cycles.

“Shanghai has already attracted some big funds from around the world. Clarifying criteria for acquiring publicly offered licenses and designing clear and simple rules will be essential to attract more foreign asset management companies. Also crucial will be enabling the development of more investment-type asset management products that can supplement individual public pensions as people shift from savings to investment,” he said.

Contact the writers at shijing@chinadaily.com.cn