China Financial Sector Assessment Program (FSAP) reports, the Financial System Stability Assessment (FSSA) and the Financial Sector Assessment (FSA) were published by the International Monetary Fund (IMF) and the World Bank (the Bank) respectively, on 15 November 2011.

The FSAP was developed by IMF and the Bank jointly in May 1999 to help strengthen the assessment and monitoring on financial vulnerability, so as to reduce the possibility of financial crisis and promote financial reforms and development in member jurisdictions. Now the FSAP has become an internationally accepted framework for assessing financial stability. At the G20 Washington Summit held in November 2008, leaders of all G20 members committed to undertake FSAP.

In the reports of China FSAP, IMF and the Bank fully recognize the remarkable achievements of China's financial system in the areas of commercialization, strengthening financial soundness and improving financial regulation, among other things. The reports point out that China has made firm progress through financial reforms and China's financial system has maintained resilience throughout the global financial crisis with continuously strengthened financial institutions. Meanwhile, the increasingly diversified financial services and products have effectively supported economic growth, and tremendous achievements have been made in the supervision and regulation of banking, securities and insurance sector as well as the establishment of efficient payment and settlement systems, with fairly good adherences to related international standards and codes in financial sector, including the Core Principles for Effective Banking Supervision, the Objectives and Principles of Securities Regulation, the Insurance Core Principles and Methodology, the Core Principle for Systemically Important Payment Systems and the Recommendations for Securities Settlement Systems. Besides, the systems for anti-money laundering and combating the financing of terrorism have also improved substantially.

To facilitate further economic growth, the reports propose that China should pay more attention to issues such as structural imbalances and insufficient commercialization of the financial system, inadequate inclusiveness of financial products and services, and the need for further improvement in the pension system and financial infrastructures. The reports suggest China further deepen financial reforms, strengthen financial regulation, improve financial stability framework, accelerate financial system commercialization process, broaden financial inclusiveness with coordinated macro-economic and financial policies, and strengthen financial infrastructures.

While the assessment in the reports is overall objective and positive, and the recommendations on the future reforms are constructive, we also noticed that, a few points in them are not sufficiently well-rounded or objective, and the time frame and suggested priorities of some proposed reform measures need to be further analyzed by taking account of many reality factors of China. We believe that, after years of reform, China's financial system has made considerable progress towards commercialization. With the completion of the stockholding reforms of the major financial institutions, the government’s involvement in the financial system is now through her participation in corporate governance as shareholders and through her nominated directors, instead of direct and administrative means. As for macro adjustment of credit supply, the People’s Bank of China has already abolished the credit quota measures by commercial banks since 1998. Currently, the People’s Bank of China guides the financial system credit supply primarily by indirect and market-oriented measures, such as the open market operations, reserve requirement ratio, interest rates and so on. The reforms of interest rate and exchange rate have made significant progress with market forces playing a fundamental role in the formation of interest rate and RMB exchange rate. As to the time frame of planned reforms, while the direction of reforms has been made clear in the 12th Five Year Plan, the concrete reform steps and sequence should be based on the reality of China with flexibility.

With cooperative spirits between IMF, the Bank and relevant Chinese government agencies, China FSAP proceeded smoothly and has achieved fruitful results. We are willing to further strengthen the collaboration and exchanges with relevant international organizations, so as to promote in-depth reforms, sound development, supervisory improvement and risk prevention in China's financial sector, and to further improve its international competitiveness.