During the recent 2019 Lujiazui Forum, China’s Vice Premier Liu He, Chairman of China Banking and Insurance Regulatory Commission Guo Shuqing, Governor of People’s Bank of China (PBOC) Yi Gang, and Yi Huiman, Chairman of China Securities Regulatory Commission (CSRC), delivered important speeches reinforcing the Chinese government’s commitment to improving the quality of economic growth as well as deeper integration of the country into the global economy and financial markets. As a participant in the conference, I was able to fully appreciate the government’s determination and confidence and I’m pleased to see that Refinitiv’s competitive advantage and our development in the Chinese and global financial markets dovetail with their growth priorities.
- Accelerating the pace of building Shanghai international financial center requires more comprehensive and trusted data.
- Green finance become national strategy in China promotes the sustainable development.
- Fintech and Regtech will play increasing important role in strengthening China financial infrastructure construction.
These can be highlighted in the following three areas:
1. Stepping up Shanghai’s transition into a global financial center – bringing China to the world
Yi Gang, Governor of the PBOC, said at the forum that the bank was fully committed to implementing strategic initiatives of the government and would effectively help Shanghai step up its transition into an international financial hub while focusing on its “five centers” policy (financial asset allocation, RMB financial asset risk management, fintech, high-quality business environment, financial talent). He believes the city is set to become a global financial center based on formation of RMB-denominated assets. With the ongoing opening up of China’s financial markets through the launch of the “Shanghai-London Stock Connect” and “Shanghai-Hong Kong Stock Connect” programmes, the international board on the Shanghai Gold Exchange, the “Bond Connect” programme and crude oil futures trading, we’ve witnessed faster deregulation of interbank bond, foreign exchange and money markets. At the same time, a slew of pilot programmes, such as overseas RMB investment, loan funds and cross-border ETFs, have been rolled out. The “Belt and Road” initiative continues to act as the driving force for the internationalization of the RMB and Shanghai is now one of the cities offering the largest range of financial products and services in the world.
The city is attracting increasing attention from global investors which means growing demand for relevant data today from participants in Chinese financial markets. As a result, Refinitiv has consistently scaled up our Chinese market data, adding to Datastream more than 300,000 economic data series targeting China in this year alone. This includes detailed sector level information as well as provincial, regional and national macroeconomic data covering over 600 cities with over 200 indicators. We also added integrated data published by China Foreign Exchange Trade System (CFETS) to our Eikon and Elektron platforms, enabling traders and investors to understand pricing and liquidity, manage risks and mark to the market.
Relying on our flagship product Eikon, we have responded to the globalization of China’s economy by rolling out a series of apps and other products specifically designed for the “Bond Connect” and Belt and Road Initiatives, as well as the more recent “Shanghai-London Stock Connect” programme. These products give global investors instant access to information about the Chinese market and have enormously facilitated investment and trading activities.
Also noteworthy is our launch of the China Price Discovery (CPD) application in April. This service collects real-time data and quotes on the Chinese foreign exchange and money markets and publishes top financial market news. With CPD, users can find the data and content they need faster and more easily, without entering any code. We believe it will become the “one-stop” channel for customers worldwide to access information about Chinese multi-asset financial markets in real time, and a must-have for all financial professionals interested in China.
Leveraging this detailed data and a diverse range of products, Refinitiv can provide global investors with more trusted and unique insights into the Chinese market, helping them trade and make decisions, seize investment opportunities and manage potential risks. We have continued to expand our financial data and information base in line with our commitment to “bring China to the world”.
In addition, Yi stressed that creating a world-class financial center was driven by competing for the best talent, as attracting a high number of world-class financial professionals is an important mark of success for any global financial center. In addition to expansion and development of financial data, Refinitiv has ramped up our talent acquisition efforts in China across our offices in Beijing, Shanghai and Shenzhen. We have a content and technology development team of over 1,000 members in Beijing, providing support for users in China and around the world.
2. Promoting healthy development of capital markets – green finance as a national strategy
The Chinese capital market has grown rapidly and currently ranks as the second-largest in the world in terms of total stock market capitalization and bond market scale. During his speech at the forum, Vice Premier Liu He reiterated that greater efforts should be made to promote the healthy development of China capital markets, enabling them to play a decisive role in resource allocation. In recent years, the government has emphasised the importance of stimulating high-quality growth through rational and efficient allocation of financial resources. The introduction of the Science and Technology Innovation Board (STIB) will trigger reform of all capital markets, nurture more innovative tech companies and boost nationwide economic restructuring, Liu pointed out.
Green finance is of course at the heart of economic restructuring and renewal. Eco-friendly development has been positioned in the 13th Five-Year Plan as one of the five main themes of China’s growth. Following the guidelines developed in 2016 to support the creation of a comprehensive green finance system, China has grown into the largest green-bond market in the world. In the meantime, all kinds of green finance innovations have proliferated. Amid rapid development of the capital market in recent years, green finance has been playing an increasingly important role in changing the economic growth model, in the optimisation of economic structure and in the shift of growth drivers. Statistics from Eikon indicate that from 2016 onward, both the total volume and value of green bonds offered in China have started to increase rapidly. Green-bond offerings in China topped USD 29 billion in 2018, the highest level in the world. Since the beginning of 2019, 22 green bonds have been issued, giving China a No. 3 ranking in the world. Establishing a green finance system has been elevated to a national strategy.
We believe continuous development and improvement of green finance and meaningful promotion of sustainable development remain one of the most daunting challenges for any country. There is a need for more transparent and trusted data to support decision-making. On a brighter note, an increasing number of Chinese enterprises and regulators have begun to adopt Environmental Social and Governance (ESG) principles as an important reference and criterion for investment and valuation activities. Refinitiv has been providing ESG data and solutions in the financial sector for 15 years. We offer one of the most diversified ESG databases in the world, containing ESG data and information on more than 7,000 global companies, with over 400 ESG data-points and more than 70 ESG analyses; we are capable of monitoring 75,000 ESG signal sources on a real-time basis. We expect our investment in ESG services and our strengths in this area will help more Chinese firms reduce investment risk effectively, deliver improved performance, and more importantly, keep developing sustainably in the right direction.
3. Ramping up financial infrastructure development – Fintech and Regtech will play a greater role
In addition to capital market development, Vice Premier Liu He also emphasized the importance of financial infrastructure construction. In fact, a fully developed financial infrastructure will not only facilitate the establishment of Shanghai as a global financial center, it’s also crucial for the deepening of China’s financial reforms. China has made headway in financial infrastructure development in recent years. By leveraging Internet, big data and artificial intelligence, an efficient financial infrastructure system has been established to deal with risk prevention, digital financial services, payment settlement and foreign exchange management. In macroeconomic terms, China has created a series of related system frameworks, the coverage of which ranges from credit information collection to anti-money laundering. At the micro level, market penetration of online and mobile payment services has reached a high level. Financial infrastructure development has transformed China into one of the world’s largest fintech markets in terms of rate of fintech adoption.
However, rapid development of fintech inherently entails serious challenges, such as data and information security risks and even money-laundering and other illegal financial activities – China and the Asia Pacific region in general have in fact become a hotbed for financial crimes. A recent survey conducted by Refinitiv shows, 75% of companies in the region have suffered losses from financial crime in the last year, and more than 50% Chinese companies indicated that they had encountered difficulties in using technologies fighting against financial crimes. Needless to say, these risks have exacerbated the challenges of financial regulation, resulting in increased demand for reliable data and technological innovation. On the other hand, international and domestic regulatory policies have tightened, which will create more favorable conditions and opportunities for the application of regtech.
China’s central bank announced the inauguration of a fintech committee in 2017. The committee is tasked with “boosting regtech applications and diversifying the regulatory tools by using big data, AI, cloud computing and other technologies, while improving the bank’s capabilities in detecting, preventing and mitigating financial risks that affect multiple industries and markets.”
As one of the oldest fintech companies in the world, Refinitiv has adhered to the “open platform” strategy for years, and it has become a viable solution for addressing challenges. Against a backdrop of continuous advances in cloud computing, machine learning and AI technologies, we work together with clients and partners to improve data sharing and utilization, connect markets, cut costs, enhance efficiency, and respond to risks and challenges more effectively. In so doing, we’re able to uncover new opportunities based on a clear understanding of the latest trends as well as maximize value creation for industries – smarter humans with smarter machines.
China has become a new global economic center and will remain so in the foreseeable future. From deepening financial reforms and transforming Shanghai into an international financial center to continuously developing capital markets and improving financial infrastructure, China’s development and its ongoing integration into the global economy have created unimaginable opportunities and expanded the scope for cooperation among financial professionals, investors and enterprises.
Focusing on the Chinese market and bringing China to the world remains a core strategic focus at Refinitiv as we surge ahead into the second half of 2019.