China'S Economy Enters A New Normal, Innovative Regulation Should Promote Each Other

The Eighteenth International Bank Supervisors' conference was held in Tianjin recently. Representatives from more than 90 countries and regions, 120 banking regulatory bodies and international economic organizations exchanged experience in supervision.

It seems to be a contradiction with regulation: innovation is accompanied by risk, and supervision means power should be restricted.

From the point of view of game theory, even if there is a short-term interest conflict between innovation and regulation, as long as the game is repeated many times, the two will achieve the equilibrium solution of "cooperation".

The banking regulatory authorities have guided the innovation on the right track by standardizing and restricting the development of the financial industry.

While innovative financial products such as shadow banking, while promoting economic development, continue to impact the existing regulatory system and put forward higher requirements for them.

To a certain extent, innovation and regulation are like races, which are mutual incentives rather than mutual fetters.

stay

The relationship between China and the developed economies such as the United States is obvious.

Compared with the US mode of "first innovation after regulation" and "no problem no regulation", China is "first supervision, then innovation", "may delay the innovation if there is any problem".

It can be seen that the United States seeks "fast" while China seeks stability.

In the international financial crisis, China's financial supervision has always ensured its stability because of its "harsh" policy.

Although the government has done a good job in the market in a very special period, China's financial market is lagging behind, so it can not always seek refuge under the seemingly impregnable regulatory system.

In the face of innovation, regulatory authorities should continue to make corresponding efforts to reduce blind spots, improve the regulatory system, and not stop and suppress economic vitality.

China's regulatory policy should focus on providing security for banking industry, providing a good environment for financial innovation, preventing and resolving financial risks, and promoting banking reform and pformation.

current

The economy has entered a new normal and the banking industry is no exception.

By constantly increasing financial products, the banking sector can also create new growth points.

In this process, supervision needs to be prepared for the rainy day, and emancipates the mind and encourages innovation.

The author believes that innovation and regulation are progressing in the game and are always in a dynamic balance.

From a regulatory point of view, the regulatory authorities must have a sense of "race" and grasp the balance between freedom and moderation. It is necessary to allow "invisible hands" to stimulate innovation and the "visible hand" to control risks.

Only in this way can the zero sum game of innovation and regulation become a win-win game, forming a virtuous circle of the two.

The world bank has lowered its forecast for China's economic growth to 7.4% this year.

The World Bank released in Singapore on 6 May to reduce China's economic growth forecast from 7.4% to 7.4% in 2014, but stressed that the Chinese government's reform measures will make the economy on a more sustainable development track.

The report pointed out that a series of measures introduced by the Chinese government, including control of local government debt, suppression of shadow banking, overcapacity and pollution control, will lead to a decline in investment and manufacturing output growth.

The world bank also lowered China's economic growth forecast from 7.5% to 7.2% and 7.1% in the next two years.

Sudheer Shetty, chief economist of East Asia and Pacific region of the world bank, said that the slowdown in China's economy will be a slow process and is not expected to have a dramatic impact on the surrounding countries.

Considering that the recovery of Global trade is lower than expected and interest rates may rise in the future, the world bank has also lowered the economic growth expectations of developing countries in East Asia and the Pacific region. It is estimated that the economic growth rate in 2014 and 2015 will be 6.9%, lower than the previous forecast of 7.1%.

Looking ahead, the world bank believes that uncertainties affecting regional economic growth still exist, especially in the euro area and Japan and other developed countries in the near future may face downside risks, the global financial environment has tightened sharply, as well as geopolitical tensions.

In addition, East Asia is also vulnerable to a sharp slowdown in China's economy, though this is unlikely to happen.

"The best way to deal with these risks in East Asian countries is to solve the fragility of the past financial and fiscal policies," he said.

The bank also suggests that countries in the region should also focus on long-term structural reforms, increase infrastructure investment, improve trade logistics, and open services and foreign direct investment.