High-level meeting urges financial services sector to bolster development

Concerted efforts to strengthen financial support for technological innovation are set to speed up after a high-level meeting urged improvement to the ability of financial services to serve economic development, experts said on Tuesday.

Among the key policy focuses would be deepening capital market reforms to further restore investor confidence and addressing the difficulties banks face in managing risks associated with loans to innovation-oriented enterprises, they said on Tuesday, after reviewing the news flow on a meeting of the Central Financial Commission held on Monday.

The meeting stressed strengthening support for major strategies, key areas and weak links, as part of efforts to fully implement arrangements of the Central Financial Work Conference.

The meeting called for efforts to promptly study and introduce specific policies and measures to do a good job in the areas of technology finance, green finance, inclusive finance, pension finance and digital finance, while highlighting the need to steadily promote financial sector opening-up and ramp up financial regulations on all fronts.

"As the foundation for economic recovery still needs to be consolidated, policymakers are likely to speed up the launch and implementation of financial support for key areas," said Lou Feipeng, a researcher at Postal Savings Bank of China.

With technological innovation at the heart of China's modernization drive, financial policymakers are expected to particularly intensify support for efforts to overcome technological bottlenecks, both via the banking system and the capital market, Lou said.

Relevant efforts are underway as new medium- to long-term loans to manufacturers and loans to innovative small and medium-sized enterprises grew by about 40 percent and 20 percent year-on-year, respectively, in the first nine months of the year, said the People's Bank of China, the country's central bank.

IPOs on the STAR Market, the ChiNext, and the Beijing Stock Exchange — three mainland listing venues dedicated to supporting technological and innovative companies — accounted for more than four-fifths of A-share floats so far this year, both in terms of their number and the proceeds raised, according to the China Association for Public Companies.

Efforts to develop the two-year-old Beijing bourse deepened as the BSE 50, an index tracking the Beijing bourse, jumped by 4.51 percent to 880.85 points on Tuesday in anticipation of the introduction of more market makers.

However, experts said there remain obstacles to strengthening support for technological innovation, given a mismatch between banks' low appetite for risk and the high-risk nature of innovative startups as well as the recent slowdown in A-share IPOs following a market downturn.

To improve their services for innovative companies, banks should strengthen risk management by further leveraging big data, blockchain and other technologies, said Zhou Maohua, a researcher at China Everbright Bank.

On the policy front, Zhou said efforts are needed to address the difficulties arising in the pricing of intellectual property rights and transactions so that banks can more easily use IPR as collateral for loans, while structural monetary tools and tax breaks can be further used to motivate banks to serve innovation-oriented companies.

The PBOC said in a recent column on its website that it will leverage structural monetary tools to guide more financial resources into technology innovation and advanced manufacturing, among other areas, to nurture new driving forces and sharpen the Chinese economy's edge over others.

Yang Haiping, a researcher at the Central University of Finance and Economics' Institute of Securities and Futures, underlined the need to strengthen crackdown on listed companies' fraudulent behavior so as to improve investor confidence, which will improve the capital market's function of financing.

All these efforts would be important as financial support is needed to help companies turn ideas into products, said Liu Shengfu, co-founder and chief operating officer of Sinsegye, a Beijing-based company dedicated to developing industrial intelligent computing and control technologies.

The company has received financial support from investment institutions such as Lenovo Capital & Incubator Group, CAS Capital and Guozhong Capital from its early development stage, which helped it bring technologies from laboratories to products in the market, Liu said.