Real Estate, Local Government Debt Solutions Discussed
"Could Be a Monumental Event for the Financial Sector"
The China National Financial Work Conference, convened for the first time in six years, is scheduled to be held privately on the 30th and 31st. There is speculation that measures to unprecedentedly strengthen control over the financial industry may be derived through this meeting.
On the 29th (local time), Bloomberg reported that Chinese President Xi Jinping is expected to convene the National Financial Work Conference on the 30th and 31st of this month. The Financial Work Conference, which has been held every five years since 1997, is conducted privately and attended by national-level leaders, regulatory authorities, and banking industry executives.
The National Financial Work Conference is a forum to discuss supporting economic growth and promoting financial reforms. The last meeting, held in 2017, was also personally chaired by President Xi. This meeting is being held unusually after six years due to delays caused by the spread of COVID-19. Key agenda items include not only real estate issues but also local government debt problems.
Bloomberg observed that through this conference, President Xi is likely to emphasize change and further strengthen leadership and control. Citing expert analysis, it predicted that President Xi will prioritize the Communist Party’s 'centralized' leadership and enhanced supervision above any other policy goals.
Several Bloomberg Intelligence economists described it as "a potentially monumental event in the financial sector," explaining that "the real estate sector, burdened with debt levels capable of shaking the financial system, adds urgency to the agenda." Sheng Songcheng, former head of statistical analysis at the People’s Bank of China, stated, "The Party Central Committee’s leadership over all fiscal affairs will certainly occupy a crucial position."
David Ku, a Bloomberg Intelligence economist, said, "It is important for the authorities to provide clear direction at the conference regarding debt resolution and crisis prevention, and the authorities may attempt to control moral hazard through stricter supervision." Liu Xiaochun, deputy director of the Shanghai Financial Research Institute think tank, forecasted, "China may hold local governments additionally accountable to resolve existing hidden debts and prevent new illegal debts."
Additionally, experts predicted that the authorities might accelerate reforms of the pre-sale system to help recover the housing market. It is also expected that the roles of major financial institutions such as the People’s Bank of China, the National Financial Regulatory Administration, and the Securities Regulatory Commission will be more clearly delineated, and that the absorption of the Financial Stability and Development Committee’s functions by the Communist Party Central Committee in March will be clarified.
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