On Jan 14th, 2018, CF40 held the Second Jinjialing Wealth Management Forum in Qingdao. The theme was "Asset Management in the New Era".
The forum commenced with welcome remarks from Liu Jianjun, Vice Mayor of Qingdao, and Jiang Duntao, CPC Secretary of Laoshan District and Director of the Administrative Committee of Jinjialing Financial District in Qingdao.
Following the opening remarks, the conference moved on to discuss the New Pattern of Comprehensive Opening-Up and the Belt and Road Initiative. Yin Yong, CF40 Member, then Deputy Governor of the People’s Bank of China; Long Guoqiang, Member of CF40 Academic Committee and Deputy Director of the Development Research Center of the State Council; Sun Xiaoxia, CF40 Academic Advisor and President of National Debt Association of China; and Fan Wenzhong, CF40 Member and Director-General of International Department at the China Banking Regulatory Commission delivered keynote speeches.
In his speech, Yin Yong pointed out that the Belt and Road Initiative presents strategic opportunities for the internationalization of the RMB. Development of the financial market and real economy naturally requires broader use of the currency. RMB internationalization is a long-term strategy that should serve China’s trade, investment and other external economic activities. To promote RMB internationalization, certain institutional obstacles should be overcome and more infrastructure should be built to facilitate the use of RMB overseas.
Long Guoqiang stated that the opening-up strategy should move with the times and the Belt and Road Initiative is a top priority. He warned that participants in the Initiative should be fully aware of the risks involved. The government and the private sector should explore new models for cooperation to achieve win-win results.
Sun Xiaoxia discussed how to use financial services to promote the Belt and Road Initiative and the overall opening-up. She proposed three principles. First, use financial innovation to meet the varied financing needs of businesses and promote regional cooperation. Second, diversify the financing system and utilize platforms such as the AIIB and BRICS New Development Bank to provide financial support for B&R countries. Third, promote research and exchange within the B&R regions.
Fan Wenzhong stated that finance is the key to implementation of the BRI, and the effectiveness of financial services should be evaluated from a comprehensive perspective, considering not only quantitative measures such as the scale of investment and financing, but also the real effect of projects. In addition, risk control is also important. Besides economic development, efforts should be made to promote people-to-people exchange and social communication.
Following the speeches, Tang Ning, Council Member of Shanghai Finance Institute (SFI), founder and CEO of CreditEase published the report Investing FOF and Embracing New Economy: New Trend of Asset Management Industry in China.
Two sessions ran in the afternoon. The first session focused on “Challenges and Opportunities for Asset Management Industry with New Regulations”. Liu Jun, CF40 Invited Member and Vice President of China Investment Corporation, first pointed out that the industry has undergone significant changes with lots of uncertainties. Past experience could provide less reference and technology is playing an ever important role. Regarding implementation of regulations, information disclosure and the investor suitability system should be improved, and the tacit rule of “guaranteed repayment” should cease to exist.
Some experts raised concerns over the impact of new regulations. Zhang Chenghui, CF40 Senior Researcher and Research Fellow at the Financial Institute of the Development Research Center of the State Council, believed that the new regulation brought more challenges than opportunities to the banking industry. Under the new regulation, banks would face shocks from liquidity risks, decreased profit and change of management models. For non-banking financial institutions, the greatest challenges would be market fluctuations and increased difficulty in expanding businesses.
Liu Xiaochun, SFI Executive Council Member and President of China Zheshang Bank, reviewed the change of the asset management industry over the past decade and concluded that wealth management products (WMPs) have become homogeneous in recent years. The reason is that with the promise of “guaranteed repayment”, WMPs have transformed from tools for direct financing into tools for indirect financing. To tackle with this problem, market participants need to clarify their needs and a wider variety of WMPs should be offered. Financial institutions should match investors’ needs with appropriate products. In addition, different types of financial institutions should be subject to different regulatory rules.
Others voiced support for the new regulation. Chen Jiwu, SFI Executive Council Member and CEO of V. Stone Fund, believed the new regulation would change the way resources are allocated, increasing the effectiveness of capital utilization and helping lower the leverage ratio of the businesses.
The second session was about “Economic Restructuring and New Trend of Wealth Management”. Guan Tao, CF40 Senior Fellow, stated that two types of opportunities currently exist for the asset management industry. First, support domestic investors in their overseas investment endeavors. Second, assist foreign investors with their investments in China, e.g. foreign investment in RMB assets.
Lu Zhengwei, CF40 Invited Member and Chief Economist of China Industrial Bank, argued that the development of the asset management industry will be significantly influenced by regulatory policies. In particular, the new regulations have imposed more requirements for liquidity management at banks.
CF40 Secretary-General Wang Haiming chaired the discussions. More than 400 guests attended the conference and 200,000 people watched live webcasting of the event. The forum was hosted by CF40, with support from the People’s Government of Laoshan District, the Administrative Committee of Jinjialing Financial District, CF40 Foundation and CF40 School of Finance.
