Speakers:

Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission

Zhao Huan, chairman of China Development Bank

Gu Shu, chairman of the Agricultural Bank of China

Luo Xi, chairman of the People's Insurance Company of China

Song Shuguang, chairman of China Export & Credit Insurance Corporation

Chairperson:

Shou Xiaoli, deputy head of the Press Bureau of the State Council Information Office (SCIO) and spokesperson of the SCIO

Date:

March 2, 2021

Shou Xiaoli:

Good morning, ladies and gentlemen. Welcome to the press conference of the State Council Information Office. The fifth plenary session of the 19th Central Committee of the Communist Party of China (CPC) made it clear that China will promote high-quality development. The high-quality development of the banking and insurance sectors is of great significance in achieving high-quality economic and social development. Today, we are pleased to invite Mr. Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, to brief you on issues regarding promoting the high-quality development of the banking and insurance sectors, and field questions. We also have with us Mr. Zhao Huan, chairman of China Development Bank; Mr. Gu Shu, chairman of the Agricultural Bank of China; Mr. Luo Xi, chairman of the People's Insurance Company of China; and Mr. Song Shuguang, chairman of China Export & Credit Insurance Corporation. Next, I will give the floor to Mr. Guo.

Guo Shuqing:

Thank you. Ladies and gentlemen, comrades and friends, good morning. First of all, on behalf of the China Banking and Insurance Regulatory Commission (CBIRC), and all the chairmen present at today's press conference, I would like to express my sincere gratitude to friends from the media who have been supporting the reform and development of the banking and insurance sectors for a long time. I hope you all enjoyed the Chinese New Year and are doing well.

Faced with the severe and complex domestic and international situations in 2020, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, the CBIRC and the entire banking and insurance sectors resolutely implemented the decisions and deployments of the CPC Central Committee and the State Council. We have been enhancing the Party's political building as the overarching principle; strengthening our consciousness of the need to maintain political integrity, think in big-picture terms, follow the leadership core, and keep in alignment with the central Party leadership; staying confident in the path, theory, system, and culture of socialism with Chinese characteristics; upholding General Secretary Xi Jinping's core position on the CPC Central Committee and in the CPC as a whole, and upholding the CPC Central Committee's authority and its centralized and unified leadership. Under the command of the Financial Stability and Development Committee of the State Council, we have risen to the challenges and acted proactively, remained committed to the general principle of pursuing progress while ensuring stability, pursued supply-side structural reform as our main task, resolutely worked to win the battle to forestall and defuse financial risks, and strived to advance the modernization of the financial governance system and capabilities. Solid progress has been made in various tasks.

First, we have contributed to the rapid recovery of the national economy which shifted from stagnation or decline to normal growth. Since the COVID-19 outbreak began, we have put people and life first and immediately formulated a series of policies and measures to ensure an overall victory in the battle against the virus, including issuing a total of 5.3 trillion yuan in special emergency credit bonds and completing relevant insurance payments of more than 500 million yuan. By the end of 2020, outstanding RMB loans rose by 19.6 trillion yuan from the beginning of the year, and we extended the repayment of principal and interest on loans of 6.6 trillion yuan in total. Emergency loans of 24.27 billion yuan were issued in five pilot provinces and cities. We have achieved the target of making interest concessions of 1.5 trillion yuan to boost the real economy throughout the year. Our actions have strongly supported the resumption of work and production, helping to ensure stability on the six fronts (employment, finance, foreign trade, inbound investment, domestic investment, and market expectations), and maintain security in the six areas (jobs, daily living needs, food and energy, industrial and supply chains, the interests of market players, and the smooth functioning of grassroots government). Manufacturing loans increased by 2.2 trillion yuan throughout the year, exceeding the total of the previous five years; 5.7 trillion yuan flowed into private enterprises, up 1.5 trillion yuan over the previous year; and health insurance spending stood at 292.1 billion yuan, a year-on-year increase of 24.2%. We have kept 1.57 trillion yuan as long-term health protection reserves stashed away against future risks. We also actively helped win the battle against poverty. Over the past three years, a total of 9.2 trillion yuan of targeted poverty alleviation loans have been issued nationwide, and a total of 3.5 trillion yuan has been provided via agricultural poverty alleviation insurance. We have actively participated in the battle against pollution, and the green credit balance of 21 major banks stood at 11.5 trillion yuan by the end of 2020.

Second, digital transformation contributed to the development of inclusive finance. The banking and insurance sectors have accelerated product and service innovation to promote the transformation and upgrading of the national economy. According to reports from relevant international organizations, China's inclusive financial services have met international standards, with electronic payments, digital credit and online insurance leading the world. In 2020, banking institutions and insurance institutions invested a total of 207.8 billion and 35.1 billion yuan in information technology respectively, representing year-on-year increases of 20% and 27%. The five largest banks have established special fintech companies, which has significantly enhanced the availability and convenience of financial services. For example, giving full play to its advantages in technology and data, China Construction Bank implemented process re-engineering to facilitate lending to small and micro enterprises. It also established a "quick loans for micro and small enterprises" online business model, and innovated a series of exclusive service solutions for inclusive finance. At the end of 2020, the national inclusive loans to small and micro enterprises stood at 15.3 trillion yuan, with a growth rate of over 30%. For the five largest banks, growth was 54.8%. Basic financial services have been extended to all administrative villages. The serious disease insurance scheme has covered 1.13 billion urban and rural residents.

Third, decisive achievements have been made in the battle to forestall and defuse financial risks. As regards the tasks and requirements put forward by General Secretary Xi Jinping at the Central Economic Work Conference at the end of 2016 and the 2017 National Financial Work Conference, risks to the banking and insurance sectors have been gradually constrained, and several major potential pitfalls and problems have been avoided. We have held the bottom line and fended off systemic risks. First, the financial leverage ratio has dropped significantly, and the blind expansion of financial assets has been fundamentally curbed. From 2017 to 2020, the average annual growth rates of total assets in the banking and insurance sectors were 8.3% and 11.4%, respectively, roughly half of the average annual growth rate from 2009 to 2016. The proportion of interbank assets idling within the financial system has also dropped significantly. Second, solid progress has been made in the identification and disposal of non-performing assets in the banking industry. We disposed of 8.8 trillion yuan of non-performing loans from 2017 to 2020, exceeding the total of the previous 12 years. Third, shadow banking has been dismantled in an orderly manner, dropping by about 20 trillion yuan from its historical peak. Fourth, financial crimes have been severely punished and the risks of illegal financial groups have been gradually defused. A large number of illegal fundraising cases have been dealt with in an orderly manner, and online financial risks have been well addressed. Fifth, with timely and effective response to external risks, we ensured that the financial system maintained strong resilience. Sixth, the financialization and bubbles in real estate have been curbed. The growth rate of real estate loans in 2020 was lower than that of various other loans for the first time in eight years. Seventh, the incremental risk over the hidden debt of local governments has been basically controlled, and we have been pressing ahead with the resolution of existing risks in an orderly manner. Eighth, the debt risks of large- and medium-sized enterprises have been handled steadily. By the end of 2020, a total of 20,000 creditors' committees had been established nationwide; the country had implemented 1.6 trillion yuan in debt-to-equity swaps according to market-oriented and law-based rule, and more than 500 large- and medium-sized enterprises had implemented joint credit granting pilot projects.

Fourth, we have fostered a positive atmosphere of strict supervision and regulation. Through unswervingly enforcing full and strict discipline over the Party and combating corruption in the financial sector, we have strengthened supervision and enforced discipline. A batch of corrupt officials who colluded with businessmen and committed embezzlement have been brought to justice. We have rigorously implemented regulations relating to separation between public and private interests, and assignment avoidance, and have increased supervision and accountability. A total of 164 people working in the banking and insurance regulatory sector received disciplinary punishment in 2020. We have accelerated supervision improvement and plugged loopholes in the system. A total of 61 items of supervision rules were completed in 2020. We have addressed disorder with severe punishment and maintained a tough position on violation punishment and accountability. We punished 3,178 banks and insurance institutions for violating laws and regulations, penalized 4,554 liable persons and confiscated a total of 2.28 billion yuan in 2020. We have resolved financial disputes through multiple means. We repaid and compensated 17.7 billion yuan to consumers, thus guaranteeing the legitimate rights and interests of financial consumers.

Fifth, the corporate governance of banks and insurance institutions with Chinese characteristics has improved step by step. We treated enhancing corporate governance as a focal point in transforming the systems and mechanisms of banks and insurance institutions. Following the consensus reached at the 2016 Hangzhou G20 Summit, we endeavored to carry out effective implementation of the G20/OECD Principles of Corporate Governance and urged to integrate the leadership of the Party into corporate governance. We should guarantee the Party's role at the core of leadership through mechanisms like cross appointment and integrating intra-Party supervision into corporate regulations. Banks and insurance institutions have established organizational structures containing shareholders meetings, boards of directors, board of supervisors and senior management. We have strengthened the penetrating supervision of major shareholders and conducted rectification work on related-party transactions. Currently, China's commercial banking system has been optimized with sufficient market competition. The operational efficiency of China's four large-scale commercial banks has approached the advanced level of international counterparts and overtaken many others in aspects like labor productivity, cost-income ratio, profitability, and scientific and technological innovation. The large-scale insurance companies have sufficient capital, being well-matched with counterparts in the U.S., Europe and Japan.

Sixth, the reform and opening up in the banking and insurance sectors keeps deepening. We have deepened reform of small and medium-sized banks and steadily improved their ability to ward off risks. Specific local government bonds totaling 200 billion yuan have been issued to increase the capital supply for small and medium-sized banks. We have deepened reforms on using of insurance funds and pricing mechanisms for commercial vehicle and accident insurance; promoted commercial pension schemes reform and health insurance development; channeled long-term funds, such as wealth management products, insurance and trust assets into supporting capital market development. We have continuously advanced opening-up measures and achieved desirable effects. We have given approval to foreign banks and insurers to set up more than 100 institutions in China since 2018. Some leading international institutions in wealth management, commercial insurance, credit rating and other fields have entered the Chinese market by means of establishing wholly foreign-owned institutions, holding controlling stakes and holding shares. Foreign institutions have become much more enthusiastic to make investments in Chinese financial market.

The year 2021 is the first year of China's 14th Five-Year Plan period. CBIRC will stick to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era; implement the guiding principles of the Fifth Plenary Session of the 19th CPC Central Committee and the Central Economic Work Conference held in December; promote fostering of a new development paradigm by making breakthroughs in high-quality development of banking and insurance sectors. We will make efforts in the following aspects: first, we will improve systems and mechanisms facilitating financial institutions to support the real economy efficiently and provide targeted support to key areas and key industries, including those conducive to China's self-reliance in science and technology, advanced manufacturing, private enterprises, small and micro businesses, rural vitalization and green development. Second, we will deepen the supply-side structural reform in financial sector, and adopt the customer-centered and market-oriented philosophy, incubate more professionally-competent and specialized financial institutions, develop more banking products to meet people's needs, and advance the regulated development of the commercial endowment insurance - the third pillar in China's three pillar pension system and other insurance services. Third, we will treat risk prevention as the eternal theme of the financial sector. There will be no let-up in our efforts to monitor and defuse various financial risks, strengthen the rule of law in the sector, and improve long-term mechanisms in this regard. Fourth, we will maintain a fair market environment, reinforce anti-monopoly and prevent capital from expanding in a disorderly fashion, and guarantee financial innovation is conducted under prudent supervision. Fifth, we will carry out deeper reforms of the financial market and institutions, advance financial opening-up to a higher-level, facilitate flows of relevant factors, and invigorate market vitality. Sixth, we will stick to comprehensively enforcing strict Party self-governance and fight corruption in the financial sector, strengthen internal management and self-improvement, and cultivate a supervision team who are loyal to the Party and people, have moral integrity, and demonstrate a keen sense of responsibility. Through our earnest efforts, we will do solid work and realize a good start in the beginning of the 14th Five-Year Plan period and celebrate the CPC's centenary with remarkable achievements.

That's all for my introduction. Now, my colleagues and I are willing to answer your questions. Thank you.

Shou Xiaoli:

Thank you, Mr. Guo. The floor is open for questions. Please identify your news outlet before asking question. Thank you.

CCTV:

My question is for Mr. Guo. Last year was the concluding year of the campaign of preventing and defusing financial risks. My question is, what key progress has we made over the past three years? What's the next step of financial risk prevention and control? You have pointed out that real estate has become the most daunting "grey rhino" among China's financial risks, so what's your opinion on the current risk in this regard? Are there new measures to be rolled out this year? All the banks have accelerated digitalized transformation over the past two years. My question is, what kind of challenges has digitalization brought on supervision? What kind of risks should we focus on during the process? Thank you.

Guo Shuqing:

Thank you. Your questions are all very good, but actually you put forward seven or eight ones. I can not take up too much time, and will answer them briefly and give more chances to other reporters and my colleagues.

To prevent and defuse financial risks, the top priority for banking and insurance industries is to follow the requirements of the CPC Central Committee and cut high leverage in the financial system. The financial system witnessed a long period of rapid growth. Then between 2017 and 2020, the annual average growth rate of the total assets in the banking and insurance industries dropped to relatively low levels, with that of the banking sector down to 8.3%, and the insurance sector down to 11.4%, roughly half the growth rates between 2009 and 2016. The share of interbank assets circulating within the financial sector without entering into the real economy has decreased noticeably. This is a remarkable achievement and is also crucial for the banking and financial systems to run in a smooth manner and keep financial risks under control.

Moreover, the banking sector has stepped up efforts to dispose of non-performing assets. Disposal of non-performing loans in the banking sector over the past four years, which was mentioned just now, equals the same amount as the previous 12 years combined.

Third, the "shadow banking" sector has been dismantled in an orderly manner. The "shadow banking" industry was large in the past and the essence of the shadow banking business such as investment, wealth management, or peer-to-peer lending is credit. It provides credit business like banks but operates outside banking regulations. For example, a bank must maintain enough capital but these [shadow banking] platforms operate without being subject to any requirement for capital, regulations, or market restraints, which will consequently lead to serious problems. The shadow banking sector has contracted by about 20 trillion yuan, which makes the overall financial system healthier and more stable.

Moreover, financial crimes have been severely punished and risks of illegal financial groups have been gradually defused, with a large number of illegal fundraising cases being dealt with in an orderly manner. Sound progress has been made in these areas.

Regarding the housing issue that you asked about, I would like to say that the risk of a real estate bubble and financialization of the sector is still acute. However, last year, the growth rate in the number of loans channeled into the real estate sector has, for the very first time, dropped to a level lower than the average growth rate of credit. This is a hard-won achievement. We are confident that problems in the real estate sector will be solved gradually. We are ramping up efforts to put a series of measures in place. Some of you may have noticed that many cities have rolled out city-specific real estate control policies to keep land prices, housing prices, and market expectation stable and ensure that housing problems will be tackled step by step. As I also mentioned, the problem of "the gray rhino," i.e. people buy homes not for living in but for investment or speculation, is very dangerous. By owning so many properties, they stand the chance of suffering huge losses in terms of personal assets once the property market goes down. Moreover, they may not be able to repay their mortgage loans and banks may not be able to take back loan principles and interest accordingly, which will lead to economic chaos. Therefore, it is necessary for us to promote the steady and healthy development of the real estate market in a proactive and prudent manner. Thank you.

MNI:

Compared with major Western economies, China has taken the lead in normalizing its policy, especially its monetary policy. What impact will the difference in policy pace between China and other countries have on China's policy and its market? Many are concerned that capital inflows and asset bubbles could lead to imported inflation. Do you see any reason for such concern? Thank you.

Guo Shuqing:

This is a really good question, and many others also have the same concern. The COVID-19 pandemic has represented a shock for the world's economy which is generally in a downward spiral. China experienced economic headwinds last year with its economy hit hardest in the first and second quarters. In the third and fourth quarters, China's economy began to return to normal but the annual economic growth rate dropped significantly compared to that of the previous years. Developed European and American countries, countries that are severely affected by the pandemic, and some developing countries all adopted proactive fiscal policies and ultra-loose monetary policies. We understand these macroeconomic policies are necessary for stabilizing the economy but we should take more consideration of the force and consequences of these measures, which have side effects that have started to show gradually. First, the financial markets are trading at high levels in Europe, the U.S. and other developed countries, which runs counter to the real economy. The financial market should be a reflection of the real economy. Problems will occur if the performance of the financial market and real economy become too different, and the financial markets will be forced to make adjustments sooner or later. So we are worried about the financial market, especially the possibility that foreign financial asset bubbles may burst one day.

Second, China's economy is closely intertwined with other countries as the economy has become highly globalized. After the increase in liquidity, the volume of foreign capital that flows into China will increase noticeably, which has been the case. China's economy is still recovering, and the prices of assets are appealing, with a larger interest rate spread compared with that of other countries. In this regard, it is inevitable to see foreign capital inflows. For now, the size and speed of foreign capital inflows remain controllable. On the one hand, we have been studying how to put more effective measures in place to encourage cross-border capital flows at an increasingly open level, while not causing huge fluctuations in the domestic financial market on the other hand. We are confident that we are able to do the job well.

CRI:

The pandemic spread across the globe in 2020. Foreign trade companies are facing severe difficulties due to a sharp decline in global trade. What measures have been adopted in the banking and insurance industries to support the resumption of work and production, and stabilize the overall performance of foreign trade? Thank you.

Guo Shuqing:

Our export situation was better than expected last year. Due to the global economic slowdown, there was no sharp decline in demand for China's products compared to previous years. Some countries even increase their imports from China. So our export situation is quite good. We've rarely seen such a big surplus in trade, which is inconsistent with the trends of the previous years, and this was aided by the special situation. Concerning this, my colleague Mr. Song, who is proficient in export credit insurance, may understand the situation better.

Song Shuguang:

Since the outbreak of COVID-19 early last year, General Secretary Xi Jinping has underscored the vital role of export credit insurance on three occasions. Over the past year, SINOSURE has fully implemented the guiding principles of General Secretary Xi's remarks as well as the decisions of the CPC Central Committee and the State Council. Under the guidance of CBIRC and other relevant departments, our company has actively enforced policies and made contributions to ensure stability on six fronts and security in six areas. During the initial outbreak, we rolled out ten measures to address the urgent need to import medical supplies in the fight against COVID-19. We also published 23 phased and extraordinary measures to ensure stability in foreign trade, increasing our support in six aspects that covered underwriting, compensation, and service. The work has delivered positive results, and progressed as follows:

First, we further increased the coverage of export credit insurance. In light of growing external risks, we carried out active underwriting policies. Last year, SINOSURE underwrote over US$700 billion worth of insured businesses, up 15% year on year, and much higher than the export growth rate. We supported exports worth US$580 billion, accounting for 22% of the total volume of exports — much higher than the average global growth. Last year, we served 147,000 clients, including more than 40,000 new clients, up by 58%, which maintained around 15 million export-related jobs.

Second, we gave firm support to our clients in major markets and industries. SINOSURE has actively promoted progress made at the Belt and Road Forum for International Cooperation and strengthened the cooperation of the third-party market. Last year, our company fully supported exports and investments to countries along the Belt and Road, with a combined business volume of over US$150 billion. SINOSURE has underwritten more insured businesses with the U.S., supporting exports to the U.S. worth over US$50 billion, up by 13%. We also formulated tailored underwriting policies for electronic information and home appliance industries, giving priority to protecting leading companies with global influence and key links, to better serve the smooth operation of industrial chains and supply chains. Last year, we supported the trade volume of the electronic information industry, which exceeded US$100 billion, up by 23%. As for the risks resulting from canceling orders or refusing to accept goods and to pay, our company increased support to guarantee sales for companies before the export, underwriting 3.4 times more than the year before in this insured business .

Third, we effectively mitigated difficulties faced by companies in accessing financing. We combined the export credit insurance risk management mechanism with the financing services of banks. The major works fall into three aspects. First, our company worked together with 167 domestic and foreign banks to provide premium financing services for foreign trade enterprises as well as tailored products. For example, we worked together to roll out the Credit Insurance Financing project to provide premium financing services for micro and small-sized companies. The service offered affordable interest rates and gives companies access to financing through an online review process without requiring a mortgage. Second, our company utilized refinancing and interest subsidy policies. Some of our funds were allocated to micro and small-sized foreign trade companies, which delivered positive results, especially in Jiangsu, Zhejiang, and Shanghai. Third, SINOSURE worked with governments and banks to establish 53 platforms nationwide for financing. Last year, SINOSURE supported companies to obtain financing, with a combined figure of 310 billion yuan, including 196 billion yuan for short-term export credit insurance, up by 34%, supporting over 4,800 companies.

Fourth, we created new services for micro and small-sized companies. Over the past two years, SINOSURE has sped up its digital transformation and upgraded its database for global companies and banks, allowing companies to access the information of 200 million overseas companies and 60 million Chinese companies. On that basis, we developed several products to serve micro and small-sized companies. First, we developed the product "alarm sensor" for micro and small-sized companies to collect information about risks and threats in a bid to support them to avoid risks and accept orders. Second, we developed the product "navigation system" for micro and small-sized companies to expand to new markets and accept new orders with the support of our database on international trade. Third, we offered professional and convenient training services for micro and small-sized companies. We then selected 1,000 micro and small-sized companies that focused on the new generation of information technology, high-end equipment manufacturing, new energy and new materials, and other industries and provided them training to help them grow. In 2020, SINOSURE served more than 100,000 micro and small-sized companies, covering 36% of the micro and small-sized companies with export businesses. SINOSURE's insurance for exports from micro and small-sized companies stood at nearly US$100 billion, up by 41%. And the claims paid to those enterprises totaled US$120 million, up by 28%. In addition, the average premium rate for micro and small-sized companies dropped by 35%, offering more benefits to those companies.

Fifth, we actively help companies to prevent and respond to risks. Since the outbreak of COVID-19, SINOSURE has taken measures in the following aspects. First, we continued to publish information on trade-restricting policies across the world to inform companies. Due to the outbreak, many countries have adjusted their trade policies, including trade-restricting policies. So we published information about these policies and other industry information from major countries to inform our companies of risks. Second, we published reports on country risk ratings, evaluating country risk and sovereign credit risk of 192 countries and regions across the world to provide a reference for companies. Third, we helped companies retrieve their losses. Via over 300 channels, SINOSURE helped companies avoid defaulting, which saved nearly US$4 billion and retrieved losses worth US$300 million. In addition, we opened a "green channel" for companies to receive compensation and eased conditions to ensure companies were able to receive compensation efficiently. Last year, claims paid to enterprises totaled US$1.8 billion, up by 32%. The average time for the closure of short-term export credit insurance was cut sharply by 41%, marking a record low.

All in all, faced with complex environment of foreign trade and unprecedented risks and challenges, SINOSURE, as a policy-oriented financial institution, played a unique role in preventing risks, promoting financing, and ensuring stability in foreign trade employment, contributing to the support of China's foreign trade and bucking the trend of recession. Thanks.

Guo Shuqing:

Sorry to interrupt. I think Mr. Song answered your question very well. They did a very good job last year. Under the pressures of the worst pandemic for a century, they supported businesses, especially micro and small businesses, in their foreign trade by underwriting 22% of China's exports. It was, of course, a measure under special conditions. Normally, people may wonder if the measure was a special support given by the government, and if it abides by the WTO rules or the rules of fair trade. I see a lot of foreign journalists here today, so I'd like to ask you this question for them.

Song Shuguang:

Export credit insurance is a tool to promote exports and overseas investment permitted under the WTO rules. Our company has been doing business under the WTO's requirements. Our three major goals are to effectively serve national strategies, support the development of enterprises and ensure financial sustainability.

Nikkei:

When speaking with the media last August, Mr. Guo, you said there would be intensified efforts to dispose of non-performing loans (NPLs) in 2021. How do you see the current situation of NPLs in the banking sector? Have you made any specific plans to dispose of those loans? Thank you.

Guo Shuqing:

We will continue with our efforts to dispose of NPLs. Every year, we see approximately 12% net growth in loans. Last year was special as we saw a faster growth rate in loans. But the growth rate was still under 13%. From this, you can see that we hadn't adopted an overly relaxed monetary policy. After the COVID-19 outbreak, the productions and operations of some companies were abnormal and they faced difficulty in repaying their loans. A considerable number of enterprises may even face bankruptcy restructuring or bankruptcy liquidation, and even less ability to repay the loans. This is why the rise in NLPs is an inevitable trend. In 2020, we already started to increase our efforts to dispose of non-performing loans, with 3.02 trillion yuan in non-performing assets disposed of for the year. We have yet to set any definite goals for this year, and are communicating with banks to see their respective conditions. We might need to dispose of more NPLs this year and some may extend to next year as some are long-term loans. However, we have confidence and the capacity to dispose of those loans. While intensifying our efforts, we should seek steady progress to ensure that the impact of NPLs disposal is within the capacity of the economy and the banking system. For this question, I think bank chairmen can give you an authoritative response. Mr. Gu Shu, would you like to answer this question? Mr. Gu is now the chairman of Agricultural Bank of China (ABC) and used to be the president of the Industrial and Commercial Bank of China (ICBC). So, he is quite familiar with the situations of both banks.

Gu Shu:

I'd like to give you some figures to support Mr. Guo's words. Reducing credit risk has long been a major part of our risk prevention and control efforts. Currently, we have credit assets of 15 trillion yuan. In recent years, under the direction of CBIRC, the Agricultural Bank of China has continued to increase its effort to dispose of NPLs. Despite the COVID-19 pandemic in 2020, we disposed of a relatively high number of NPLs and maintained stability in our credit assets. As Mr. Guo just said, the banking system disposed of over 3 trillion yuan in NPLs last year. Our bank is a public company, so I'm not in a position to tell the exact number here today, but the scale of our NPLs disposals matches our position in the banking system. So, my first point is that we have intensified our efforts in disposing of NPLs and maintained stability in regards to our credit assets.

Second, despite the COVID-19 pandemic and the impact of economic fluctuations, the asset management capacity of Chinese commercial banks is improving. Take the Agricultural Bank of China as an example. We have adopted very strict definitions regarding NPLs. According to the regulation, loans are considered non-performing if the borrower is 90 days past due. But in our definition, corporate loans are considered non-performing if the borrower is 20 days past due, in order to increase our foresightedness in asset management. Our bank's NPLs ratio was relatively high for some time, but it has already dropped to the average level of our counterparts. The end of this month is a critical point as the Central Bank, last year, extended the repayment of principal and interest of small business loans to March 31, 2021. We have been recently following the asset quality of those loans. As far as we know, those loans have a higher NPL ratio than other loans but are still under our control. According to our statistics, there is a risk that the NPL ratio may rebound. However, we believe that the risk is controllable under the direction of CBIRC and the concerted efforts of our staff.

That's all. Thank you.

Guo Shuqing:

I'd like to make an explanation here. He said he is not in a position to tell you the exact number of NPLs. However, that number will be announced in accordance with the banks' rules as a public company. Some other information will also be disclosed, such as the level of remuneration of senior executives. So please feel free to ask him any questions. The socialist economic system and market economy system with Chinese characteristics have many similarities with the market economy system and financial system in Western countries. We disclose information about our capital funds, competition, labor productivity, and cost-to-income ratio. Our cost-to-income ratio is less than half of the banks in Europe and the United States. The main reason is that our salaries are relatively low. China is still a developing country. We need to take taxes, dividends paid to our shareholders, and other contributions such as poverty alleviation as well as our social responsibilities into account. Large banks in China need to assume many responsibilities, but our counterparts in other countries don't. We follow the same business and sustainability principles but our national condition is different from Western countries. Thank you.

The Paper:

During the Spring Festival, new data about the birthrate in China drew wide attention, and many are worried that China's aging population may affect its economic sustainability. What kind of long-term and institutional arrangements will China's banking and insurance sector make regarding its participation in improving the social security system and developing the old-age insurance system? Thank you.

Guo Shuqing:

What you've asked is very important. China is a developing country and an emerging market economy, but it didn't take long for China to become an aging society. Currently, more than 12% of China's total population are aged 65 and over. This figure is much lower than Japan and Europe. It is also lower than that of the U.S., which is about 16%. Nevertheless, according to experts' analysis, China may surpass the U.S. in this regard pretty soon. Therefore, aging populating is indeed a big challenge for China. We have been doing research on many aspects. A couple of days ago, the Ministry of Human Resources and Social Security held a press conference and briefed on the issue. It said that relevant measures will be adopted, including raising the retirement age. In contrast with the past, people nowadays are not willing to have more children, and this is a big challenge. We will also take other measures, including developing the third pillar of old-age insurance. The Central Economic Work Conference made specific arrangements on the issue, urging regulation of the development of commercial endowment insurance, more commonly referred to as the third pillar of China's pension system. Mr. Luo will give more information in this regard.

Luo Xi:

Thank you for your question. This is an issue of public concern among the media and society. As we know, China has entered an era of high life expectancy, and it faces the challenge of an aging population. Just now, Mr. Guo introduced the situation. The large number of China's aging population, the country's fast speed into an aging society, as well as the arduous tasks it has for elderly care have been rarely seen in the world. Compared with some developed countries, China's pension system is relatively complete. More than 1 billion people have been covered by basic old-age insurance, which has basically achieved full coverage. The system of enterprise annuities, occupational annuities, and group annuities is developing gradually. Despite the small proportion these types of annuities take, they have been developed for over ten years. The development of personal pension has been rather slow, and the proportion it takes in China is much smaller than in Western developed countries.

General Secretary Xi Jinping made deployments on the issue at the fifth plenary session of the 19th CPC Central Committee and the Central Economic Work Conference. The State Council also held many meetings last year to study the issue. CBIRC conducted extensive research and formulated relevant policies and implementation plans. These efforts have sped up and strengthened the development of the third pillar of old-age insurance amid relevant reform and innovation efforts.

Compared with the first two pillars of old-age insurance, the third pillar has different functions and distinctive features. First, it provides a channel for personal pensions for high-income groups. Second, it provides a commercial guarantee of old-age care for employees of new business models and multiple working ways. Third, via the long-term funds for elderly care, we can promote the healthy development of the capital market, including cross-cyclical investment. There are more short-term investments and less long-term cross-cyclical investments in China. Thus, pension funds, especially commercial pension funds, can greatly promote the healthy development of the capital market once they enter into it.

In accordance with the deployments being made by CBIRC, The People's Insurance Company of China (PICC) has made some proactive efforts regarding the issue.

First, the PICC has proactively been introducing products of commercial endowment insurance. Through traditional life insurance products, nearly 330 billion yuan has been stashed away for people on elderly care and life insurance. In response to the deployments of CBIRC, we have been working to develop old-age insurance products which are suitable for the elderly of all income groups. In cities such as Shanghai, Fujian, and Suzhou, we have introduced tax-deferred personal commercial pension insurance. As the taxation is still insufficient, we suggest that the government make comprehensive considerations from multiple aspects and increase tax exemption appropriately. In addition, we took the lead and attempted to introduce reverse mortgages pension insurance in 29 cities. Traditionally, Chinese people are used to owning their own houses. How should people be financially prepared for elderly care when they get old? We have been proactively making attempts in this regard and opening a channel for them.

Second, the PICC has been actively introducing long-term care insurance, in a bid to address the nursing care issue of elderly people and those with disabilities and dementia. In 2020, the PICC established 96 long-term care insurance programs, providing services for some 42 million people. We have been actively working on these insurance services in all provinces and cities.

Third, the PICC has been proactively developing the pension industry. We have given full play to the advantages of long-term pension funds, established a PICC investment fund of senior care industry, and focused on the investment of senior care industries such as long-term care providers and comprehensive care providers for the senior. We have explored new insurance models of elderly care and launched the development of multi-layered elderly-care communities, in which elderly people have access to insurance, hospitals, and elderly care services for their various needs. The PICC is China's largest health insurance company, and we are also cooperating with some well-established global health insurance companies, in order to introduce some good business models into China.

Fourth, the PICC has actively participated in managing the funds of pension insurance. The amount of enterprise annuities and occupational annuities managed by the PICC has reached 250 billion yuan, more than twice the amount of last year. The rate of return of our business last year exceeded 10%, which played a good role in maintaining and increasing the value of our pension assets.

The financial reform of pensions is crucial in coping with the aging society. The PICC will resolutely put into practice the deployments being made by the CPC Central Committee and work under the unified guidance of CBIRC, further giving full play to commercial insurance's role in pension risk protection and long-term fund management. The PICC will participate in developing a multi-layered and "multi-pillar" pension insurance system, accelerate the development of commercial pension products, and help develop the third pillar of old-age insurance. The PICC will make innovations on products and services, working to meet people's diversified needs on old-age care and make contributions in extending adequate old-age support. Thank you.

Bloomberg:

There is a question regarding fintech that I would like to ask Mr. Guo. What role should Ant Group's fintech company have in the domestic financial market? Are there any businesses that are not suitable for them? Thank you.

Guo Shuqing:

Thank you for the questions. Both domestic and foreign media are very concerned about the issue and have published quite a few reports. I believe you are well-informed about the situation. Four financial authorities (the People's Bank of China (PBOC), the CBIRC, the China Securities Regulatory Commission (CSRC), and the State Administration of Foreign Exchange (SAFE)) have carried out regulatory talks with Ant Group's top executives, and released update of their discussions in a timely manner. Pan Gongsheng, deputy head of the PBOC, has also made remarks on the issue.

China takes leads the world in online platforms' provision of financial services, in terms of both scale and scope. Much positive progress has been made, especially in digital credit and digital insurance to micro, small and medium-sized enterprises, among other services. Many innovations have been rolled out, and we encourage innovation.

But at the same time, we require that all forms of financial services, without exception, should be regulated in accordance with the relevant laws, rules, and regulations. For example, CBIRC recently released a notice on regulating commercial banks' internet loan businesses. According to the notice, when commercial banks jointly contribute funds to issue internet loans with a partner, the proportion of capital from the partner in a loan should not be less than 30%. It also set out requirements on the proportion of the balance of internet loans from a bank to its net worth. A one-year grace period was given to ensure steady implementation of the requirements.

We also encourage the development of private online banks, such as MYbank under Ant Financial Services Group, WeBank under Tencent, and another one based in Sichuan province. But the operation of these banks must be regulated in accordance with financial rules. We don't think of these as constraints on their business. But all their businesses, such as insurance, trust, leasing and other financial services, should comply with the rules of the financial sector. I believe those institutions will meet the requirements and achieve more healthy development. Thank you.

Phoenix TV:

Mr. Guo, we noticed that the U.S. administration has imposed sanctions on some Chinese companies and individuals. What's the impact of the sanctions on China's financial market and system? Where do Chinese financial regulators stand and what measures will be taken in response to the sanctions? In addition, what new steps will be introduced this year to advance the opening-up of the financial sector? How will the security review mechanism on foreign investment affect the investment of foreign financial institutions in China? Thank you.

Guo Shuqing:

Every country has its own sovereignty. This is a long-established consensus among the international community. Both China and the U.S. are sovereign countries, and we all have our own sovereignty. Therefore, financial institutions in China must be regulated in accordance with Chinese rules, just as financial institutions in the U.S. must follow U.S. rules. The U.S. has interfered a lot in Chinese internal affairs, which we think is groundless and unreasonable. We firmly oppose such interference. CBIRC as well as China's banking and insurance system as a whole will never act in accordance with U.S. laws and regulations. We must implement China's laws and regulations. Financial institutions in Hong Kong, including Chinese-funded institutions and foreign-funded institutions, must conform to Hong Kong's laws and regulations. We will not implement the U.S. sanctions, and we firmly oppose such sanctions, which are totally non-binding. However, we are willing to cooperate with American financial institutions, companies in all sectors, and intermediary agencies. In fact, China's opening-up has been advanced at a fast pace. As I mentioned just now, over the past three years, we have approved the establishment of more than 100 foreign banking and insurance institutions in China. For example, German insurer Allianz was approved to set up a 100% foreign-owned subsidiary in China; Crédit Agricole Corporate and Investment Bank and Bank of China jointly established a wealth management subsidiary; the largest asset management company BlackRock cooperated with China Construction Bank in pension fund management; and British multinational asset management company Schroders is cooperating with the Bank of Communications. Up to now, we have approved the establishment of 25 wealth management subsidiaries. Many are in cooperation with foreign capital. We welcome more foreign investment, no matter if it's in the form of sole proprietorship or joint ventures. Many of the examples I gave now are joint ventures. This year, we will continue to consider expanding cooperation in these areas and further lowering the threshold for foreign investment to ensure they receive the same treatment as Chinese-funded institutions. In fact, no field is not opening up.

There is concern among the domestic public, including some officials and intellectuals, that foreign capital may bring about disruption and damage to China's financial market. As far as we know, foreign-funded institutions generally observe Chinese laws in their operations. The amount of their total assets, loans and deposits in the Chinese market is on the rise, but the proportion is in decline. For example, foreign-funded banks now account for only 1% of China's banking industry, down from 1.3% and 1.4% before. Their market competitiveness is limited. Foreign-funded insurance companies account for about 6%, higher than that of the banks, but their influence is also limited. Therefore, we continue to encourage foreign financial institutions to enter the Chinese market for common development. Thank you.

China Daily:

This year marks the start of the 14th Five-Year Plan. What measures are the banking and insurance sectors taking in terms of serving innovation-driven strategies, developing technological finance and supporting strategic emerging industries? What do you plan to do next? Thank you.

Guo Shuqing:

I would like to invite Mr. Zhao Huan, chairman of CDB, to talk about this issue. As we have just discussed, the development bank is involved in development finance. It is very courageous, doing business that others haven't, so its development business is pioneering. However, since the investment risks in the technology and innovation industries are very high, I asked him about how to manage the risks of investment loans. Since we do not have special policies for CDB, it has to achieve business sustainability on its own terms. So, I'd like to invite Mr. Zhao to answer this question.

Zhao Huan:

Thank you for your question. And thank you Mr. Guo for providing this opportunity to introduce the current situation, which demonstrates how development finance has served science and technology innovation and innovation-driven development.

In recent years, in order to implement the new development concepts, under the guidance and support of CBIRC and other departments, CDB has vigorously developed technological finance and served innovation-driven development, achieving positive results.

First, we have given our full support to major science and technology innovation projects. In 2020, we issued a total of 149.4 billion yuan in loans to support science and technology, which is an increase of 23% year on year. We have served a series of major scientific and technological projects, in such areas as integrated circuits and commercial aircraft, assisting new breakthrough achievements in core technologies within key areas.

Second, we have actively supported the development of strategic emerging industries and advanced manufacturing industries. In 2020, we issued 330.4 billion yuan in loans to strategic emerging industries, and issued 265.9 billion yuan in medium- and long-term loans to manufacturing industries, representing an increase of 37% year on year, which is a record high.

Third, we have vigorously supported investment in the integrated circuit industry. CDB's subsidiary companies have successfully completed the first phase investment for the national integrated circuit industry investment fund, and supported the rapid development of key enterprises in the integrated circuits industry, with the investment achieving a remarkable economic effect. We have been operating on a market-oriented basis. Last year, the value of technology companies increased significantly, and the funding investment also achieved a significant economic effect. The market-oriented operation was very successful. At the same time, we have also participated in setting up the second phase investment for the national integrated circuit industry investment fund, and raised a total of 200 billion yuan. The fund has now entered the investment phase.

This year marks the first year of the implementation of the 14th Five-Year Plan. CDB will earnestly implement the major decisions and deployments made at the fifth plenary session of the 19th CPC Central Committee and the Central Economic Work Conference. We will continue to support technological finance, provide services to make the science and technology industry more self-reliant, and better serve the innovation-driven development strategy. Our work will cover four measures:

First, we will set up special loans to serve and strengthen the national strategic science and technology capabilities. We will synergize with the 10-year action plan for national basic research, the strategic science and technology plans, and the construction of major national science and technology projects, laboratories, science and innovation centers. We will set up special loans for scientific and technological innovation and basic research, and plan to issue more than 50 billion yuan in special loans for major scientific and technological projects this year.

Second, we will continue to provide more credit resources and support the high-quality development of strategic emerging industries and advanced manufacturing industries. Starting this year, we are planning to launch special financial activities as part of the "Bailian Qianqi" program. We will select a hundred leading enterprises in the field of science and technology innovation and a thousand of their key upstream and downstream industrial chain businesses to provide special financial services. We are also planning to arrange more than 400 billion yuan in loans for strategic emerging industries and advanced manufacturing industries.

Third, we will increase equity investment and offer services for modernizing the industrial and supply chain. We will apply the industrial investment funds and science and technology innovation funds managed by the CDB and continue to increase equity investment in integrated circuits, advanced manufacturing, and science and technology innovation. We are planning to increase the equity investment by over 50 billion yuan.

Fourth, we will create new models for technological finance and provide effective support for innovation-driven development. We will use a combination of multiple financing models, including equity investment, credit loans, structured financing and "debt financing plus investment options," to support innovation-driven development. In addition, we will play a guiding role in partnering with other financial institutions to integrate various resources and social capital, and are planning to increase the intensity of serving innovation-driven development through syndicated loans, joint loans and joint investment.

Finally, I would like to thank you again for your interest in technological innovation-driven development and development banks. Thank you.

Cover News:

We know that in recent years, financial institutions have done a lot of work in poverty alleviation, but there are still many farmers and township enterprises reporting that there is a problem with loan difficulties. As the poverty alleviation task has been completed as scheduled, may I ask what new achievements will be made in terms of consolidating the results of poverty alleviation and rural revitalization? Thank you.

Guo Shuqing:

We should all give our respective answers to your question, but due to time constraints, we will get Gu Shu, chairman of the Agricultural Bank of China, to answer it.

Gu Shu: Thank you for your question. I understood your questions had two parts. First, what are the bank's plans for consolidating the results of poverty alleviation and rural revitalization? The second is to reflect on the availability of rural finance. I will answer them separately.

For the first part of your question, taking the Agricultural Bank of China as an example, I would say that we are ready to focus on three aspects in the next step. The first is to ensure that we embark on a program of rural revitalization after the victory in poverty alleviation. The second is to support the development of modern agriculture and rural industries. The third is to support rural construction. This is the answer to your first question.

In terms of focusing on the effective connection between poverty alleviation in financial services and rural revitalization, I will talk about one main point due to the time limit. In the 832 key counties that have benefited from national poverty alleviation initiative, the Agricultural Bank of China will continue to provide strong credit lines and loans in 2021. The growth rate of loans to poverty alleviated counties continues to exceed the average growth rate of loans of the entire bank. This is the point I want to stress. In terms of modern agriculture and rural industries, we plan to focus on the national food security industry belt, the construction of high-standard farmland, and the turnaround of the seed industry, and provide financial support in these three areas. Our current loan balance in the field of food security is 160 billion yuan, and we plan to further invest more than 60 billion yuan this year. In addition, we will increase credit allocation for primary processing and deep processing of specialty agricultural producing localities. Previously, the Central Rural Work Conference pointed out that the main body of the industrial chain should be kept at the county level, and the benefits of the value chain should be reserved for farmers. The third is rural construction. We will focus on 11 key areas of national rural and agricultural investment, and continue to increase support for eligible rural aspects such as water, electricity, road, natural gas and housing. The Agricultural Bank of China's loan scale in the field of rural construction has exceeded 1 trillion yuan. We will further increase our investment in the future to ensure that the growth rate of loans does not decline. This is my brief answer to the first aspect of your question.

Regarding the second part of your question, you mentioned the availability of financial services and the difficulty of obtaining loans in financial services. I want to talk about the plan of the Agricultural Bank of China.

Serving agriculture, rural areas and farmers are surely demanding us to be more down-to-earth, but on the other hand, we are also considering how to solve the problem of accessibility. The key point is that we think that the "three rural" services should not only be grounded, but also have wings -- the wings of technology. This is mainly reflected in channel innovation and product innovation, with two key points.

One is channel innovation. We will strengthen the construction of offline physical outlets and build more outlets in counties and towns, and at the same time increase the promotion of mobile banking in rural areas. Mobile banking is very common in cities, and next we must make mobile banking more in line with the needs of rural areas and farmers. By the end of last year, the Agricultural Bank of China had registered 165 million mobile banking customers in rural counties, and the number of its monthly active customers was close to 50 million. This year, we will further increase efforts in this area to allow farmers to obtain financial services more conveniently and quickly. The other aspect is product innovation. We will launch online financing products to make it easier for farmers to obtain loans and financial services. For example, an innovative online financial product has been launched called "Huinong e-Loan." This product realizes online application, online approval, online issuance, and online repayment of rural clients' loans, thus comprehensively improving the coverage and processing efficiency of rural clients' loans. It provides more credit and loan support to more farmers. By the end of last year, the balance of this product had exceeded 350 billion yuan, benefiting 2.76 million rural households. We plan to invest another 160 billion yuan this year to make the balance of "Huinong e-Loan" exceed 500 billion yuan. This product is very effective in many places, especially in some remote areas. Let me give you an example: Tibet. Based on the characteristics of its industry, our Tibet bank branch has innovatively launched a group of farmer-benefiting products that poor people can understand and find easy to operate, such as the "yak loan," "highland barley loan". At the end of last year, the balance of targeted poverty alleviation loans exceeded 6 billion yuan. More than 70% of poverty-stricken households with registered cards in Tibet received microfinance support from our bank, accounting for more than 90% of the loans provided by the financial institutions in Tibet. We are also making a lot of effort in this regard to solve the problem of financial availability for rural households, especially in hinterlands as you mentioned just now. Thank you again for your question.

New York Times:

I'm from New York Times. A question for chairman Guo and also a question for Mr. Song, please. Chairman Guo, some people argue that fintech companies have so much information on their customers that they don't need in the medium or long-term to make the same capital adequacy standard as banks. Do you agree with that or is your medium-term goal here or over next several years to push the fintech sector directly or indirectly towards the same capital adequacy standard as banks? And second, Mr. Song, you mentioned near the end of your remarks a 32% jump in compensation last year for Sinosure's payout, and we've all seen there have been tremendous difficulties in many commodity-rich developing countries that have borrowed a lot through Sinosure. So where does the money come from for that 32% increase in compensation? Did Sinosure need some kind of additional injection of money from the Finance Ministry or others, or was that mandatorily through big jumps in the premiums that you charge exporters? Thank you.

Guo Shuqing:

Your question is a very good one. As I mentioned above, if a company's financial operations are carried out through the internet platforms, whether it be banks, micro-loan companies, or consumer financing companies, we do require them to have adequate capital like other financial institutions. At a thematic meeting held by the National Committee of the Chinese People's Political Consultative Conference in May 2018, Vice Premier Liu He made some remarks, which I think are very informative for all sectors of society. First, he said you need capital to do business. You need even more capital in the financial sector. China's financial sector ran well as early as more than two thousand years ago, and back then people had capital. How do you promote finance without capital? The same is true of other industrial and commercial businesses. Second, Liu stated that money borrowed needs to be repaid. You lend money and you must get repayment, otherwise business is unsustainable. The same applies to banks. Why are there many illegal fundraising cases? Many people tricked into fundraising happily think that the profits are high, say 8%, 10%, and 12%. When explaining why the earnings from banks are so low, those behind the illegal fundraising say that banks face high costs due to a large number of employees and property, so they can't provide high returns. This is not true and the main reason is actually because of capital constraints. Banks are more cautious and they must get back what they have lent, otherwise, they would collapse. Third, Liu noted that investment involves risk. Whether it be for individuals, institutions, or enterprises, investment can be risky and we must be aware of this. Fourth, Liu remarked that you will pay a price for bad doings. Therefore, we require internet platforms to have the same capital adequacy ratio as long as they have the same financial business. However, for historical reasons, we have given them a transitional period, some until the end of this year and some until the end of next year, and we may do some research and make the period even longer for some platforms. In the past, some financial institutions served small and micro enterprises, especially low-end clients, and we had relatively low requirements for these institutions. They offered 2% or 3% of loans as intermediaries between lenders and borrowers. We don't want to affect these clients so that they can continue to receive loans steadily. The transitional period can be longer, for them and that depends, but the maximum is two years, after which all the institutions should move back on track and are subject to capital constraints.

Song Shuguang:

I'm happy to answer this question. Sinosure is a policy-backed insurance company but it also operates based on the market and following commercial principles, which forms both the backdrop and premise.

You mentioned the increase in compensation last year and wonder where the money came from. Well, we operate completely as a commercial company and we set aside reserves every year based on reported losses, settled yet-to-be-paid losses, and losses that have been compensated and paid. The accumulated reserves set aside over the years support our compensation and payment. Risks were on the rise last year but manageable on the whole. Thank you.

Hong Kong Economic Herald:

I have a question for Mr. Guo. You said earlier in Hong Kong that Hong Kong is an irreplaceable bridge. What new measures will the CIRC take to support and stabilize Hong Kong's status as an international financial center during the 14th Five-Year Plan period, especially to support Hong Kong as an offshore RMB center as well as the issuance of digital currency bonds?

Guo Shuqing:

Digital currency is mainly a matter of the central bank. Although I work in the central bank, today is a special session of the CIRC. You may seek an answer another time from the staff of the central bank.

My colleagues and I share the same attitude towards the issue of Hong Kong. We are full of emotion and we firmly support the long-term prosperity and stability of Hong Kong. As an important financial center in the world, Hong Kong has played an irreplaceable role in the past 40 years of reform and opening up on the Chinese mainland. As far as the utilization of foreign capital is concerned, the vast majority of foreign direct investment and the vast majority of foreign capital flowed in through Hong Kong. At present, investment in the capital market, such as the "Shanghai Hong Kong Stock Connect," "Shenzhen Hong Kong Stock Connect" and "Bond Connect," also came in through Hong Kong. I still remember that when I was the chairman of the CSRC in 2012, two officials from the Hong Kong Stock Exchange and the Shanghai Stock Exchange studied and put forward the idea of the "Shanghai Hong Kong Stock Connect". When we discussed it together, we thought it was very feasible and indeed it has played a very good role. In the course of future development, Hong Kong can also provide support for mainland enterprises in listing and issuing bonds. We support foreign debt, US dollar debt, foreign currency debt, RMB, Hong Kong dollar and other forms. We also support the listing of banking and insurance institutions in Hong Kong and the development of more Hong Kong banking and insurance institutions on the mainland. We hope to continue this trend in the future.

Recently, we have formulated the development plan of the Guangdong-Hong Kong-Macao Greater Bay Area, in which the financial sector accounts for a large proportion, and there will be many new initiatives. There will be more new initiatives especially in the aspect of financial management, such as financial links. These initiatives are now being studied and discussed and will be gradually implemented. We believe that Hong Kong's economic growth will turn from negative to positive this year, and there will be good prospects. Thank you.

Hong Kong Commercial Daily:

Mr. Guo just mentioned that the banking industry has fulfilled a lot of social responsibilities. Last year, financial institutions provided 1.5 trillion yuan worth of benefits to society. My question is, can this policy continue this year? What measures will be taken to support the real economy? Thank you.

Guo Shuqing:

A lot of existing policies will continue. Since the interest rate of the whole market is picking up this year, I expect the interest rate of loans will also rise. There may be some adjustments, but overall, the interest rate is still relatively low. In addition, there will be no big change in fees, and the reduced fees will not be recovered. We will continue to support enterprises and reduce their burden by supporting financial restructuring, debt restructuring, enterprise restructuring, debt to equity swap and other forms.

Zhao Huan:

Last year, the China Development Bank provided 33.5 billion yuan worth of benefits to the real economy by reducing the loan interest rate, and reducing and remitting the charges for intermediary business. This is a direct transfer of benefits, not including the support for financial restructuring, bankruptcy restructuring, bad debt write-off and other aspects mentioned by Mr. Guo just now. This year, the China Development Bank will continue to actively support the development of the real economy and maintain a low level in loan pricing. Of course, the cost of loan capital will change with market changes. On the whole, the net interest margins of banks will remain at a low and stable level. In terms of charges, it will continue to provide benefits to the real economy to strongly support the "six stabilities" and "six guarantees". Thanks.

Shou Xiaoli:

Today, our press conference lasted about 100 minutes. Thank you, Mr. Guo. Mr. Guo not only released information as a speaker, but also asked questions as a reporter. Thanks to all the speakers, and also to all the friends of the press. That's all for today's press conference. Goodbye, everyone.

Translated and edited by Cui Can, Guo Yiming, Liu Qiang, Zhu Bochen, Li Huiru, Zhang Liying, Wang Yanfang, Yan Xiaoqing, Fan Junmei, Zhang Rui, Wang Zhiyong, Xiang Bin, Mi Xingang, Huang Shan, Wang Wei, Wang Yiming, Yuan Fang, Gong Yingchun, David Ball, Jay Birbeck, and Tom Arnstein. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.