Since the 18th National Congress of the Communist Party of China, the development of China's financial industry has made remarkable achievements, and the banking and insurance industries have achieved a new leap-forward development.

On September 14, 2022, the People's Bank of China disclosed the latest, preliminary statistics, at the end of the second quarter of 2022, the total assets of China's financial institutions were 407.42 trillion yuan, an increase of 9.7%.

According to the 2022 Global Top 1000 list of banks released by the British "Banker" magazine, among the regions ranked by assets, China ranked first with 41.53 trillion US dollars.

Finance is an important core competitiveness of the country. Since the 18th National Congress of the CPC, China's financial industry has continuously strengthened the Party's leadership over financial work, followed the law of financial development, and promoted the construction of a modern financial regulatory framework.

In particular, the National Financial Work Conference was held in 2017, and the financial industry has comprehensively changed its development concept, taking the real economy as the purpose, clarifying responsibilities, returning to the source, putting the service of the real economy in the first place, taking the initiative to "blood transfusion" and "hematopoietic" for the real economy, and forming a virtuous circle of symbiosis and co-prosperity of the financial and real economy.

Change of concept: from virtual to real, the stock of social financing is 337.21 trillion yuan

In July this year, in the 2022 Global Top 1000 list of banks released by the British "Banker" magazine, according to the tier 1 capital ranking, Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China and Bank of China occupied the top four, and Bank of Communications ranked 10th. That means Chinese banks already account for half of the top 10.

Chinese banks continue to lead the World Bank ranking, reflecting the steady improvement of the overall competitiveness of China's banking industry.

Recent ten years, finance of our country advances by leaps and bounds. By the end of August, the total assets of financial institutions in China's banking sector reached 361.19 trillion yuan, up 9.8% from a year earlier, according to data from the Banking and Insurance Regulatory Commission.

The total size of the financial sector increased significantly, laying a solid foundation for serving the real economy. Preliminary statistics show that by the end of August 2022, the stock of social financing was 337.21 trillion yuan, an increase of 10.5% year-on-year. Among them, the outstanding RMB loans issued to the real economy was 206.83 trillion yuan, an increase of 10.8 percent year-on-year.

In terms of increment, the scale of social financing increased by 2.43 trillion yuan in August 2022, of which RMB loans issued to the real economy increased by 1.33 trillion yuan, an increase of 63.1 billion yuan year-on-year.

From a structural point of view, the balance of RMB loans issued to the real economy at the end of August accounted for 61.3% of the stock of social financing in the same period, 0.2 percentage points higher than the same period last year.

The reporter noted that in the past decade, the average annual growth rate of bank loans was 13.1%, which basically matched the growth rate of nominal GDP.

Financial support for small and micro enterprises, green development, scientific and technological innovation and other key areas and weak links has been increased. By the end of June 2022, the outstanding balance of RMB inclusive finance loans was 29.91 trillion yuan, an increase of 20.8% year on year, 9.6 percentage points higher than all loans; The balance of small and micro loans reached 21.96 trillion yuan, up 23.8% year on year; The outstanding medium - and long-term loans in the manufacturing sector increased by 29.7% year-on-year.

In terms of green loans, the balance is among the highest in the world. At the end of the second quarter of 2022, the balance of local and foreign currency green loans was 19.55 trillion yuan, an increase of 40.4% year-on-year, 7.4 percentage points higher than the end of the previous year, and 29.6 percentage points higher than the growth rate of various loans. Among them, the loans invested in projects with direct and indirect carbon emission reduction benefits were 8 trillion yuan and 4.93 trillion yuan, accounting for 66.2% of green loans.

At the same time as the "volume increase" of credit, the loan interest rate is also declining, and the financing cost of the real economy is reduced. At the end of August 2022, the average interest rate on corporate loans was 4.05%, the lowest since statistics began.

Over the past decade, the comprehensive strength of China's insurance industry has also been increasing, with the total assets of the insurance industry increasing from 7.4 trillion yuan at the end of 2012 to 24.9 trillion yuan at the end of 2021, becoming the second largest insurance market in the world. At the end of August, the total assets of the insurance industry further increased to 26.63 trillion yuan.

In the same period, China's insurance depth increased from 2.98% to 3.93%, an increase of 0.95 percentage points; The insurance density increased from 1144 yuan/person to 3179 yuan/person, that is, an increase of about 1.78 times in ten years. Since its establishment in 2012, the serious illness insurance system has covered 1.22 billion urban and rural residents, long-term care insurance has covered nearly 150 million people, and agricultural insurance has increased its risk protection for rural households from 0.9 trillion yuan in 2012 to 4.7 trillion yuan in 2021.

Industry governance: A total of more than 2,600 illegal shareholders

In the past decade, the financial governance system with Chinese characteristics has been continuously improved, the institutional arrangements for the integration of the Party's leadership into all aspects of corporate governance have taken initial shape, the ownership structure has been more optimized, the equity management has been more perfect, the "three committees and one layer" operating mechanism has been more reasonable, and the internal checks and balances of financial institutions and external supervision have been mutually reinforcing.

In April 2018, after the merger and establishment of the China Banking and Insurance Regulatory Commission, it held a special meeting on corporate governance of small and medium-sized banks and insurance companies, proposing that banking and insurance institutions should strictly regulate equity management and adhere to the three bottom lines of long-term stability, transparency, integrity and fairness. It is necessary to strengthen the construction of the board of directors, clarify the responsibilities of the board of directors, strengthen the capacity building of directors to perform their duties, and clarify the legal status of the supervisory board, and standardize the performance of senior executives.

A series of industry regulations have been introduced successively, such as the "Corporate Governance Code for Banking and Insurance Institutions", "Supervision Measures for the behavior of major shareholders of banking and insurance institutions (trial)", "Performance evaluation Measures for directors and supervisors of banking and insurance institutions (trial)", and "Management Measures for related Transactions of banking and insurance institutions", etc., the banking and insurance industry corporate governance system has been continuously improved.

Implementation of these new policies was immediate. At the end of 2021, the person in charge of the relevant departments of the Banking and Insurance Regulatory Commission notified that after two years of special rectification, a total of more than 2,600 illegal shareholders were removed, a total of 140 million yuan were punished for violations of institutions and responsible persons, 395 responsible persons were punished, and some personnel were disqualified and banned from entering the industry. Urged the internal accountability of banking and insurance institutions to deal with the relevant departments or branches 360 times, and held 5,383 individuals accountable, including 674 people under Party discipline and disciplinary sanctions. The list of 66 major illegal shareholders was disclosed to the public in three batches. Market constraints have been further strengthened.

In addition, significant progress has been made in the reform of asset management of financial institutions. In April 2018, the Guiding Opinions on Regulating the Asset Management Business of Financial Institutions were released, which for the first time unified supervision of the asset management business across all types of financial institutions. On this basis, the "Measures for the Supervision and Management of Commercial Banks' Financial Services" was issued, which clarified in the form of administrative regulations that financial services should break the rigid payment and must not promise to guarantee capital, and stipulated that banks should carry out financial services through subsidiaries, and public financial products issued by subsidiaries can directly invest in stocks.

According to industry reports, at present, the proportion of net worth products in bank financial services has increased significantly. By the end of 2021, the balance of net worth financial products was 26.96 trillion yuan, accounting for 92.97%, an increase of 23.89 trillion yuan compared with before the release of the new regulations on asset management, and the transformation process of product net worth was significant.

Major progress was made in the pilot reform of the third pillar pension insurance. Trials of exclusive commercial pension insurance were expanded to cover the whole country, and trials of pension financing were expanded to cover ten localities and ten institutions. By the end of May 2022, the amount of pension financing subscription exceeded 60 billion yuan.

Over the past decade, China has introduced more than 50 policies to open up its banking and insurance sector. By the end of 2021, the capital and assets of foreign banks in China have increased by more than 50% compared with 10 years ago, and the capital and assets of foreign insurance companies in China have increased by 1.3 times and 6 times over the past 10 years. A large number of professional banking and insurance institutions, such as foreign wealth management companies and foreign asset management companies, have actively participated in the development of China's financial market.

During this period, the deep integration of finance and technology has accelerated the transformation of the financial industry, and in the past decade, China's fintech level has gradually stepped into the forefront of the world. Domestic banking and insurance institutions continue to increase investment in information technology infrastructure, establish an organizational structure adapted to the development of financial technology, do a good job in relevant technology, data and talent reserves, and use emerging technologies such as artificial intelligence, big data, cloud computing, blockchain and biometrics to improve their business level. We will vigorously develop mobile Internet terminal business and explore the construction of an Internet financial service platform. Strengthen network security construction, strengthen customer information security protection, and improve the level of emergency response and disaster recovery.

According to the industry report, more than 70% of bankers said that their bank's financial technology investment accounted for more than 2% of revenue in the past three years. According to the annual report of listed banks in 2021, the average investment in science and technology of state-owned large banks is 17.92 billion yuan, that of joint-stock banks is 6.2 billion yuan, that of urban business behavior is 810 million yuan, and that of agricultural business behavior is 470 million yuan.

At the end of 2021, the China Insurance Association disclosed data that since 2018, the industry's total investment in information technology has reached 94.185 billion yuan. In 2020, the total investment in information technology in the industry will be 35.1 billion yuan, accounting for 0.63% of the operating income. By the end of 2020, the number of formal IT employees in the industry will exceed 26,000, accounting for 2.51% of the number of formal employees. Insurance technology, as the concrete embodiment of financial technology in the insurance industry, plays an increasingly important role in the process of enabling the high-quality development of the industry.

Financial technology has also benefited the general public, who can use financial services anytime and anywhere through mobile phones. In China, 82 percent of adults will use digital payments to make payments to merchants in 2021. In 2021, the country's banking financial institutions handled 439.506 billion non-cash payment businesses, amounting to 4415.56 trillion yuan, up 23.90% and 10.03% respectively. During the same period, banking financial institutions handled 17.37 billion mobile payment services in rural areas, up 22.2% year-on-year.

Risk prevention and control: Accumulated indigestion assets of 16 trillion yuan in the past decade

Preventing and resolving financial risks is the fundamental task and eternal theme of financial work.

Over the past decade, the financial industry has dealt with a large number of prominent risk points, steadily resolved and dismantled the risks of illegal financial groups, and handled and reformed the risks of small and medium-sized banking and insurance institutions. Over the past ten years, more than 600 high-risk small and medium-sized institutions have been restored and disposed of.

On the one hand, the financial industry has stepped up provisions and the disposal of non-performing loans. Over the past decade, accumulated indigestion assets reached 16 trillion yuan, and a large number of prominent risks and hidden dangers have been eliminated. Among them, it is worth noting that from 2017 to the end of July 2022, the cumulative disposal of non-performing assets of 13.5 trillion yuan has exceeded the total disposal of the previous 12 years.

On the other hand, the supervision severely punished financial violations, dealt with serious illegal enterprises such as Anbang Group and Huaxin Group according to law, and completed the takeover of Baoshang Bank and six insurance trust institutions of the "Tomorrow Department". The number of illegal fund-raising cases, the amount involved, and the number of people involved have declined for three consecutive years.

On this basis, the banking industry has maintained excellent asset quality, and the financial industry's ability to prevent and control endogenous risks has been significantly improved. According to the data, by the end of the first half of 2022, the non-performing rate of commercial banks was 1.67%.

In addition, the capital replenishment channels of financial institutions have been further enriched, and the capital strength has been continuously enriched. For small and medium-sized banks, in July 2020, the executive meeting of The State Council proposed to allow local government special bonds to reasonably support small and medium-sized banks to replenish their capital. A new path to capital for small and medium-sized banks.

In the first half of 2022 alone, with the approval of The State Council, 103 billion yuan has been allocated to the four provinces (municipalities) of Liaoning, Gansu, Henan and Dalian, while guiding small and medium-sized banks to coordinate endogenous capital replenishments.

At the end of the second quarter of 2022, the core tier 1 capital adequacy ratio of commercial banks was 10.52%, Tier 1 capital adequacy ratio of 12.08%, and capital adequacy ratio of 14.87%, and all indicators were at the highest level in the past decade.

Shadow banking risks have been resolved in an orderly manner. As of the end of the first half of this year, the scale of risky credit-like shadow banking fell by about 29 trillion yuan from the historical peak. Capital protection financial management, which contains huge hidden dangers, withdrew from the market, peer financial management fell 99% from the peak, and peer investment and non-standard financing were significantly reduced.

In July 2022, Liang Tao, vice chairman of the China Banking and Insurance Regulatory Commission, disclosed that by the end of 2021, the rectification of the stock financial services had been basically completed, the capital protection financial management with the nature of just clearing up, and the accumulated pressure drop of insurance asset management products to be rectified was 96%. Trust in the channel category and trust in the financing category have dropped by 80% and 43% from the peak value respectively, and a small number of assets that are difficult to dispose of have been included in the case disposal in accordance with regulations, and will be cleared as soon as possible.

The momentum of the real estate financialization bubble has been substantially reversed. The financial system adheres to the positioning of "housing does not speculation", focuses on the goal of "stabilizing land prices, stabilizing housing prices, and stabilizing expectations", continues to improve the long-term mechanism of real estate financial management, and prudently dispose of some risks of the head housing enterprises.

The financial leverage ratio has decreased significantly. The blind expansion of financial assets has been effectively curtailed. Since 2017, total assets in the banking sector have grown at an average annual rate of 8.2%, less than half the average annual growth rate between 2009 and 2016.

In summary, the past decade has been a decade of high-quality development of the financial industry, a decade of vitality and fruitful achievements. Every step of the way counts, and the past decade in finance is destined to be a chapter in the annals of history.