Staying committed to the path of financial development with Chinese characteristics

Editor's note: Li Yuju is the deputy director of the Research Center on Xi Jinping's Economic Thought. The article reflects the author's views and not necessarily those of CGTN. It has been translated from Chinese and edited for brevity and clarity.

Since the 18th National Congress of the Communist Party of China (CPC), the Party Central Committee with Comrade Xi Jinping at its core has actively explored the rules governing financial development in the new era, forging a path of financial development with Chinese characteristics. More than 30 years ago, during his time working in Fujian Province, Xi had already engaged in deep reflection and conducted pioneering practices in the financial sector. These explorations laid the groundwork for the financial chapter of Xi's economic thought, building on and carrying forward the path of financial development with Chinese characteristics, and embodying the unique value of the times. 

Firstly, the political nature and people-oriented focus of the financial work must be upheld. This is what fundamentally distinguishes the path of financial development with Chinese characteristics from Western financial models. While working in Fujian, Xi had recognized the importance of the principle that the Party should supervise the financial sector and emphasized the need to strengthen the Party's leadership over financial work. He advocated the use of financial tools to realize, safeguard, and develop the interests of the people. He also proposed the innovative "five-household joint guaranty and micro-credit" model for sustainable poverty alleviation and support for vulnerable groups. Meanwhile, a creative Mountain-Sea Collaboration assistance mechanism was established, encouraging financial institutions from developed coastal regions to channel financial resources into less developed mountainous areas.

Among the "eight principles" that must be followed along the path of financial development with Chinese characteristics, the first two emphasize on upholding the centralized and unified leadership of the Party over the financial work and adhering to the people-centered value orientation. Therefore, we must integrate the Party leadership into all aspects of financial work. By harnessing the power of finance in fulfilling responsibilities to the people, devising strategies for their prosperity, and delivering tangible benefits, we can effectively transform political and institutional strengths into financial governance outcomes.  

Secondly, financial services should remain rooted in their core mission of serving the real economy. During his time in Fujian, Xi stressed the importance of making full, flexible, and effective use of financial policies, tailoring financial service tools to local needs, and accelerating the development and improvement of financing channels for small and medium-sized enterprises. He pioneered a model of raising foreign debt to finance infrastructure, successfully providing urgently needed funding for the expansion of Xiamen Airport. He also introduced syndicated loans to support the construction of the Third Min River Bridge in Fuzhou, setting a precedent across the province. Xi pointed out that "finance should play its role in serving the real economy." This tells us that we must make effective use of finance, stay rooted in the real economy, cater to the needs of consumers and investors, actively enhance financial services in underserved or weak areas, and continually improve the alignment between finance and the economy.  

Thirdly, innovative financial development should be advanced through market-oriented and law-based approaches. While working in Fujian, Xi faced the challenge of large-scale tree planters struggling to secure loans. Instead of issuing administrative orders to force banks to provide support, he innovatively used future income from "standing forest stocks" as collateral, helping tree planters access bank financing. In response to financial chaos, he strongly supported financial institutions in protecting their claims in accordance with the law, promoted credit awareness, restored order to the credit system, and helped establish a rigorous credit system to penalize dishonest behavior in accordance with the law. These practices have revealed that the vitality of finance lies in the market, and its order is anchored in the rule of law. Only by adopting market-oriented and law-based approaches can we ensure a balance between dynamism and order, allowing the "invisible hand" of the market and the "visible hand" of the state to work in harmony.

Fourthly, the bottom line of financial security must be safeguarded. Over the past century, Western countries have experienced dozens of major financial crises, largely due to the detachment of finance from the real economy, circular capital flows within the financial sector, and regulatory failures. While in Fujian, Xi viewed financial risks as "a political issue that affects the people's interests and social stability." Faced with risks arising from informal fundraising schemes, he advocated for evidence-based governance over arbitrary classifications, firmly opposed government endorsement of private promissory notes, and emphasized the importance of grassroots mediation and public engagement. These measures effectively maintained regional economic and social stability. With regard to risks stemming from the dysfunction of rural credit foundations, urban credit cooperatives, and trust investment companies, he promoted targeted clean-up and rectification efforts based on local realities, eschewing one-size-fits-all policies, minimizing disruption to the overall environment, and preventing residual effects, ultimately averting losses of several hundred million yuan. This experience highlights that we must be keenly aware of potential dangers, uphold bottom-line thinking, strengthen oversight across the entire process, and firmly remain committed to ensuring that no systemic risk occurs.

The experience and lessons from Fujian must be thoroughly summarized, learned from, and applied. Based on this foundation, innovation in financial practices, theories, and institutions should be further advanced, with continued commitment to the path of financial development with Chinese characteristics.