Tackle three challenges via true reforms
- By Wan Zhe
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E-mail China.org.cn, January 3, 2016
Innovation has to be supported not only by favorable general policies but also by targeted policies. Relevant policy makers should have the expertise and vision relating to specific industries and trades. The development of basic research and human resources is the foundation to support long-term vitality of market and the real economy as well. The Chinese government must show more patience and be less restless, which originates from its eagerness to prove the success of its policies, in promoting innovation.
Last but not least, China's market reform, in many areas, has evolved faster than supervision and administration.
The fast market reform of China's financial sector increasingly exposes the backwardness of China's market supervision mechanism. The roller-coaster changes of China's stock market this year shows that the authority's supervision, administration and understanding fall far behind the innovation of financial tools and financial products.
The stability of China's financial sector after the U.S. Federal Reserve increased its interest comes from China's effective counter measures, as well as the market reform and internationalization of China's financial industry.
However, China is still in the primary stage in terms of the number and complicacy of its financial derivatives. China has not yet fully lifted its control over capital account convertibility. It means that the country still has a shield to hide from the dangerous "rainstorms" of the outside world. China should waste no time in improving its ability, skill and understanding of the complexity of the global financial sector to prepare for the future rainstorm.
The freedoms of market reform and supervision are two sides of a coin. Effective supervision is the foundation for the financial market's security and flexibility, as well as a key to maximize the market reform's positive effects.
Hopefully, the Chinese government can solve the three issues, or at least point the country in the right direction, through concrete reforms in 2016.
True reform brings about growing pains, not superficial achievements to boast of. Development should fundamentally benefit the people, not only the vested interests.
Wan Zhe is the chief economist with China National Gold Group Corporation.
This article was translated by Li Yang. Its original version was published in Chinese.
Opinion articles reflect the views of their authors only, not necessarily those of China.org.cn.
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