Deleveraging is one of China's major tasks as it continues its supply-side structural reforms. Our Guan Xin takes a look at China's deleveraging process and why it is important for the country's economic development.

Minsheng Bank is one of China's largest banks. Minsheng chairman Hong Qi says the lender is stepping up deleveraging efforts to better serve the needs of China's real economy.

HONG QI, CHAIRMAN MINSHENG BANK "China's economy is now undergoing a transitional period. The problem of overcapacity and high leveraging are posing risks to China's financial sector. Deleveraging, de-stocking and cutting overcapacity are the fundamental ways to prevent risks in the financial sector."

Changes can already be seen in adjustments of the bank's credit policies.

HONG QI, CHAIRMAN MINSHENG BANK "For example, we are tightening credit to industries with overcapacity problems, or environmental pollution. On the other hand, we should support new and strategic industries, innovative enterprises, and small enterprises."

Deleveraging is also an important task in the financial sector itself. Government efforts include tightening control of interbank activities and off-balance-sheet wealth management products, and specifying new rules for loosely regulated emerging businesses. That's to clean up the cash loan, or micro lending, market. The vice governor of China's central bank -- Yi Gang -- said late last year that progress has been evident.

YI GANG, VICE GOVERNOR PEOPLE'S BANK OF CHINA "The overall leveraging level of China's financial sector has increased marginally in the first three quarters of this year. Financial risks are basically under control. We can definitely win this battle. Generally speaking, reform and opening strengthened China's resilience to fend off risks. As a result, we should uphold reforms and opening-up in the deleveraging process."

Analysts say deleveraging efforts will continue, as the prevention of financial risks has been named one of China's three key battles. Financial institutions will be under pressure this year but analysts also say that the move will be a long-term positive.