德银-中国金融业：建立可持续和安全的金融体系-2021.5.14正文版.doc

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1、Deutsche BankResearchAsiaCross-DisciplineDateChinaChina Market14 May 2021PerspectivesBuilding a sustainable and secure financial systemKey Theme I - Building a sustainable and secure financial system: The 14th FYP has set the long-term objective of Chinas financial sector development as to build a s

2、ustainable and secure financial system, an upgrade of that in the 13th FYP. We discuss five distinctions in the upgraded objective. Over the next five years, we expect the 14th FYP to bring critical upgrades to the structure, competitiveness, inclusiveness, and openness of Chinas financial system.Ke

3、y Theme II: Regulating Chinas internet platforms: Chinas regulatory environment in the digital landscape has fundamentally changed. In this thematic piece, we try to organize our thoughts around this important policy change: (1) Whats the rationale behind the governments recent actions, and what are

4、 its concerns about Chinas big internet platforms? (2) how will the government regulate the big platforms differently going forward? and (3) what are the implications for Chinas internet platforms?Linan LiuStrategist+852-2203 8709Perry KojodjojoStrategist+852-2203 6153Yi Xiong, Ph.D.Chief Economist+

5、852-2203 6139Grant FengResearch AssociateMichael Spencer, Ph.D.Chief Economist+852-2203 8303Distributed on: 14/05/2021 01:10:11 GMTEconomic Outlook: Chinas GDP growth slowed sequentially in Q1. QoQ growth dropped sharply to 0.6% in Q1 from 2.6% in Q4. GDP output level has again fallen below its pre-

6、Covid growth path. Household income and spending have both slowed, while household savings rate has increased again. We revise down our 2021 real GDP growth forecast by 0.5ppt to 9.5%. Owing to this change in growth outlook, we now expect the PBOC will hold its policy rates unchanged in 2021; the fi

7、rst MLF rate hike will likely be in the first half of 2022.RMB outlook: Following the recent turn in the broader dollar trend, and with the CFETS basket now below the 97 level, RMB appreciation should resume without too much resistance from the authorities. As we have argued since last year, our con

8、structive RMB thesis is based on a stronger BoP backdrop and a bullish growth outlook, and these factors remain in play especially the former. However, in light of a more challenging capital account dynamics - including slower portfolio inflows, a potential rise in US-China friction, and a sizeable

9、dividend payment in 2Q - and with the dollar outlook still unclear in the medium term; we are looking for a more modest move in USD/CNY to 6.3, versus our earlier expectation of 6.2. We continue to recommend long CNH/TWD to express our positive view on RMB.RMB fixed income outlook: We maintain our c

10、ore bear steepening view on RMB rates in May as the balance of risk factors is likely to tilt towards upside risks on RMB long term yields primarily due to supply risk and inflation expectation. We retain our core long RMB bond position via CDBs but limit our duration exposure up to the 3Y tenor and

11、 we will look to extend duration if 10Y CGB yield breaks above 3.3%.Deutsche Bank AG/Hong KongDISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 051/04/2021.7T2se3r0Ot6kwoPa14 May 2021China Market PerspectivesKey theme I: Building a sustainable and secure financial systemSumma

12、ryThis year, China began to implement its 14th Five Year Plan 2021-2025 and Vision 2035 (“14th Five-Year Plan (2021-2025) for National Economic and Social Development and the Long-Term Objectives Through the Year 2035”) with the objective of advancing its economic and social development with greater

13、 qualitative upgrades and greater sustainability. Understanding Chinas long term development strategy of its financial sector and financial market, which is a critical aspect of Chinas 14th FYP and Vision 2035, will help us assess the medium to long term trend in Chinas macro policy and regulatory o

14、rientation as well as financial institutional, structural and financial market development outlook.Throughout the nineteen sections and sixty-five chapters in the 14th FYP, China laid out a comprehensive blueprint with twenty key objectives of its long term social and economic development. Financial

15、 sector and capital market development which determines financial resource allocation is clearly a vital part in Chinas economic structural rebalancing. We believe the 14th FYP has set the long term objective of Chinas financial sector development as to build a sustainable and secure financial syste

16、m, which is an upgrade of “building a modern financial system”, the objective as set in the 13th FYP. In our view the upgraded objective has five distinctions from that in the 13th FYP and we discuss in detail.Over the next five years, we expect the implementation of the 14th FYP to bring exciting c

17、hanges to the structure, competitiveness, inclusiveness, and openness of Chinas financial system. We present our thoughts of key impacts on the RMB financial market development.In conclusion, we expect the 14th FYP likely will put China on a path towards important structural upgrades in Chinas monet

18、ary policy framework, financial sector, financial market and financial regulation, making Chinas financial system more sustainable and secure. In turn, such a financial system will facilitate productivity gains, allow for technology innovation and support Chinas long-term sustainable economic and so

19、cial development. With an increasingly transparent and efficient monetary policy framework, a fast expanding capital market, growing capital account convertibility as well as a vibrant green finance market, we believe that RMB financial market will continue to attract long term investment inflows fr

20、om global investors.IntroductionThis year, China began to implement its 14th Five Year Plan 2021-2025 and Vision 2035 (“14th Five-Year Plan (2021-2025) for National Economic and Social Development and the Long-Term Objectives Through the Year 2035”) with the objective of advancing its economic and s

21、ocial development with greater qualitative upgrades and greater sustainability. Understanding Chinas long termLinan LiuStrategistlinan.liu+852-2203 8709Page 2Deutsche Bank AG/Hong Kong14 May 2021China Market Perspectivesdevelopment strategy of its financial sector and financial market, which is a cr

22、itical aspect of Chinas 14th FYP and Vision 2035, will help us assess the medium to long term trend in Chinas macro policy and regulatory orientation as well as financial institutional, structural and financial market development outlook. In this report, we discuss our thoughts on the development st

23、rategy in the 14th FYP relevant to the financial sector and capital market and look the answer the above question.Building a sustainable and secure financial systemThroughout the nineteen sections and sixty-five chapters in the 14th FYP, China laid out a comprehensive blueprint with twenty key objec

24、tives of its long term social and economic development. Financial sector and capital market development which determines financial resource allocation is clearly a vital part in Chinas economic structural rebalancing. We believe the 14th FYP has set the long-term objective of Chinas financial sector

25、 development as to build a sustainable and securefinancial system, which is an upgrade of “building a modern financial system”, the objective as set in the 13th FYP. In our view the upgraded objective has five distinctions from that in the 13th FYP.Financial sector development needs to support China

26、s “Dual Circulation” economic rebalancing strategyAcknowledging that global economic recovery faces unprecedented uncertainties amid COVID induced global economic downturn, rising global protectionism and geopolitical tension, China is pushing for the “Dual Circulation” economic rebalancing strategy

27、 which allows domestic and overseas markets to reinforce each other, with the domestic market as the mainstay. Technology innovation, industrial and service sector modernization, green and low-carbon development, and a high-level open economy are at the heart of Chinas pursuit of growth sustainabili

28、ty. How the financial sector development, which by mobilizing Chinas sizable savings (at RMB228trn by the end of Q1 2021), can best facilitate credit and equity capital flows and drive investment and consumption growth into productive sectors and businesses which are key to Chinas economic structura

29、l upgrade will ultimately determine Chinas medium to long term economic prosperity.Deepening financial supply side structural reformsProgressive structural reforms remain crucial behind Chinas aspiration for greater total factor productivity gain and market efficiency gain during the next five years

30、 and China will continue to push forward supply side structural reforms to build a highly adaptable, competitive and inclusive modern financial system in order to effectively support the real economy. The 14th FYP laid out a wide range of financial reforms to be carried out:1. Central bank reform: M

31、odernize the central bank system and improve the mechanism for regulating the money supply.2. Digital currency: Prudently advance research and development on digital currencies;3. Interest rate reform: Improve interest rate pricing and transmission mechanism, improve central bank policy rate system,

32、 strengthening the benchmark loan pricing function of Loan Prime Rate (LPR);4. Financial institution reform: Optimize the structural of financial system by:(a) Commercial banking sector: Deepen the reform of state-owned commercial banks, improve the governance of medium and small banksDeutsche Bank

33、AG/Hong KongPage 314 May 2021China Market Perspectivesand rural credit cooperatives, regulate the development of non-bank financial institutions and increase support for inclusive finance; (b) Policy backed finance: Optimize and reform the financing provided by policy banks by strengthening their ca

34、pacity to meet demand for implementing national strategy and national planning; (c) Insurance sector: Deepen reforms of insurance companies and improve the capacity of commercial insurance companies; (d) Corporate governance: Ensure financial institutions improve their corporate governance and impro

35、ve the supervision of financial transactions by their shareholders and relevant parties;5. Capital market reforms: (a) Improve financing structure and increasedirect financing: Improve the capital markets basic rules and develop multi-level capital market structure to promote the growth of instituti

36、onal investors and increase the proportion of direct financing, especially equity financing. (b) Equity market reforms: Introduce the registration-based IPO system to the main board and new third board, improve delisting as a normal practice, improve the overall quality of listed companies, deepenin

37、g the reform of the new OTC market; (c) Bond market reforms: Refine market-based bond financing mechanism, steadily expand the size of the fixed income market, enrich the supply of debt products; issue long term CGBs and long term bonds for infrastructure investment; (d) Financial market reform: Imp

38、rove investor protection and deposit insurance scheme;6. Regulatory reform: Improve modern financial regulatory system, close regulatory loopholes, promote financial innovation prudently and orderly, enhance the comprehensive risk coverage regulatory framework, improve the transparency and “rule of

39、law” of financial regulation.7. Fintech development: Steadily develop financial technology, accelerate the digitalization of financial institutions; strengthening the supervision of risk assessment on the usage of technology and financial innovation, explore and establish the rectification and suspe

40、nsion mechanism of innovative products.8. Financial opening up and RMB internationalization: (a) Prudently opening up financial service sectors such as the banking, security brokerage, insurance, fund management and futures; (b) Promoting the mutual connectivity of onshore and offshore capital marke

41、t; (c) Refine qualitied foreign institutional investors scheme; (d) Prudently and steadily promote RMB internationalization based on market demand and create a new type of cooperation based on free usage of the RMB.Develop green finance system to support green and low-carbon economic transitionWe be

42、lieve China is keen to promote green transformation in every area of economic and social development over the next five years to meet its ambitious long term climate initiatives (peak carbon emission in 2030 and carbon neutrality in 2060) by guiding financial resources allocation to green developmen

43、t areas. Specifically China will (a) develop multi-level green finance market, support carbon emission exchange market; (b) promote ESG and encourage banking sectors to accelerate the development of green finance products, introduce domestic green taxonomy which aligns with international standard; (

44、c) support regional cooperation on green finance under the Belt and Road Initiative and attract foreign investment into Chinas green assets.Page 4Deutsche Bank AG/Hong Kong14 May 2021China Market PerspectivesEmphasize on policy coordinationMore emphasis has been placed on the system thinking and pol

45、icy coordination, which are fundamental to the effective implementation of financial development strategies in the 14th FYP. We believe there are four key areas of policy coordination:1. Coordinating monetary policy and fiscal policy to support multiple economic growth targets such as job creation,

46、consumption, investment growth, industry sector growth, regional economic development, green development, etc.2. Coordinating development policies in the financial service sector, technology innovation, industrial upgrade and green development. During the 14th FYP, China is looking to modernize its

47、industrial system which has four important pillars, namely the real economy, tech innovation, modern finance, and human resources development. As such financial sector development needs to take into consideration the development needs of the other three pillars. Specifically, it is necessary to cons

48、ider policies to incentivize financial institutions to provide long term financing to support manufacturing sector and service sector upgrades, to guide investment to new strategic industrial sectors; to promote inclusive finance and lower the market access to affordable financing to micro firms, small businesses and private business; and to support rural vitalization and pro