China News Service:

Mr. Xiao, you just introduced the reform of China's banking and insurance industries. Could you please elaborate on the major changes in the development pattern and comprehensive strength of the two industries in the past 10 years? In particular, what progress has been made for the banking industry in international financial services and the insurance industry in terms of risk protection? And what are the next moves? Thank you.

Xiao Yuanqi:

Thank you for your questions. Over the past decade, we have taken several approaches. At present, the entire development pattern of the banking and insurance industries has undergone some changes.

First, the comprehensive strength has been reinforced. Thus far, the total assets of China's banking industry are 344.8 trillion yuan, as compared to 133.6 trillion yuan at the end of 2012. It has now become the world's largest banking market. The total assets of the insurance industry increased from 7.4 trillion yuan at the end of 2012 to 24.9 trillion yuan at the end of 2021, making it the second-largest insurance market in the world. In the ranking of the world's top 1,000 banks, nearly 150 Chinese banks are on the list. China's four major banks -- the Industrial and Commercial Bank of China (ICBC), the Agricultural Bank of China (ABC), the Bank of China (BOC), and the China Construction Bank (CCB) -- have become global systemically important banks. The total capital of China's banking and insurance industries has increased from 9.5 trillion yuan at the end of 2012 to 32.4 trillion yuan at the end of 2021, so the capital strength has been greatly reinforced.

Second, the financial structure has been continuously optimized. The proportion of indirect financing and direct financing is much better suited for serving economic and social development and financial needs. The allocation of urban and rural financial resources has become more reasonable. At present, there are 8.8 banking institutions and 15.8 insurance institutions on average in each county. More financial resources have been channeled to counties and the countryside. The concentration and decentralization of financial resources have become more balanced. The financial assets of the top five banks account for 38% of the total. Such a proportion is relatively reasonable, which is conducive to the rational allocation of financial resources and the maintenance of financial stability. Also, we have a relatively appropriate share and deployment of large, medium, small, and micro banking and insurance institutions. A financial institution system has been formed, within which the institutions facilitate and complement one another. At present, China's financial structure is basically consistent with China's economic system, economic development stage, prevailing financial practice, and financial needs.

Third, the financial governance system with Chinese characteristics has been continuously improved. The centralized and unified leadership of the Party over financial work has been comprehensively strengthened, the Party's leadership has been included in all aspects of corporate governance, the share structure has been optimized, and shareholding regulation has continued to be enhanced. The operation mechanism featuring shareholders' meetings, board of directors, supervisory board, and senior management structure has been more reasonable. The checks and balances within the financial institutions and external supervision have had a positive effect on each other.

You also asked about inclusive finance and insurance industry's risk protection. Regarding inclusive finance, all villages have access to basic financial services. The loan interest rate for inclusive loans of micro and small businesses has dropped by more than 2 percentage points, and the availability of rural financial services has continued to increase. At the end of 2021, agriculture-related loans exceeded 43 trillion yuan, an increase of 25.6 trillion yuan over the end of 2012. Large and medium-sized banks have also generally established inclusive finance departments or other specialized institutions. Inclusive financial services stayed ahead internationally.

Regarding risk protection of the insurance industry, we know that the insurance industry can serve as an economic "shock absorber" and a social "stabilizer," and can play an important role in many fields. For example, we have provided insurance for more than 3.3 billion doses of COVID-19 vaccination. Environmental pollution liability insurance has also covered more than 20 industries with high environmental risks. Technology insurance has strongly supported innovation and development. In addition, catastrophe insurance, agricultural insurance, and other insurance have provided a very important source of funds and protection against risks for post-disaster reconstruction and enterprises and residents to quickly return to normal life and work after a disaster.

In general, the world has marveled at the achievements of China's banking and insurance sector in the past decade. In the next step, we will continue our efforts mainly from the following aspects:

First, we will continue to optimize the financial structure. Second, we will continue to deepen the reform of banking and insurance institutions, and strengthen the construction of corporate governance, especially the reform of rural credit cooperatives, urban commercial banks, and the insurance marketing system. Third, we will further strengthen risk prevention and control and emphasize the improvement of the endogenous capabilities of banking and insurance institutions in preventing and controlling risk. Fourth, we will build a financial supervision system with Chinese characteristics to ensure all financial activities are supervised across the board and establish a full-chain and all-round supervision mechanism arrangement before, during and after the event.

Thanks!