Podcast: Keys to China's successful financial reform

A raft of liberalization measures reflects Beijing's determination to reform the financial sector.

People's Daily Online Business Podcast by Li Zhenyu
Previous: How to solve China's shadow banking dilemma

The financial reform is widely regarded as a key factor in facilitating China's transition to a consumption-led growth model and in allowing market forces to play a greater role in capital allocation.

As a matter of fact, China has been on a firm trajectory toward a more modern and reformed financial system. Tremendous progress has been made along the way, including widening the yuan's trading band against the U.S. dollar, further expanding the QFII quota and scraping the floor on lending rates for China's commercial banks, among others.

The recent introduction of a raft of liberalization measures and the establishment of a free trade zone in Shanghai could well reflect Beijing's determination to push ahead with reforms in the financial sector.

To further implement the financial reforms, are there any areas that China should pay special attention to?

Timothy Adams is the current President and CEO of the Institute of International Finance (IIF) and a former Undersecretary for International Affairs at the U.S. Department of the Treasury, where he was the George W. Bush administration's point person on international financial and economic issues.

He believes that a clear roadmap and careful sequencing are two keys to China's successful financial reform.

"I'd encourage broad-based reform in the financial sector, and in sequence that coordinated in the right fashion," Adams told me recently.

The IIF President also applauded Beijing's efforts in pushing forward the financial reforms and said the reforms are going in the right direction.

"Actually I think you already know what to do. President Xi and Premier Li and your top financial and economic leadership had already begun to articulate a vision for economic reform generally that I think is right on. It's spot on. It's exactly the right direction that you should be going," said Adams.

"The Chinese authorities are already doing the right thing. I would just encourage them to continue on this road to reform and where it went possible to accelerate that process so that China can make the transition to a new growth model."

And here, one thing we need to pay special attention to is the pace of the financial reform. What will be the risks for China if the nation opens its financial markets too quickly? The former U.S. Treasury Undersecretary will break them down in our next episode.

Next: The next critical step in China's financial reforms

• IIF President Timothy Adams on capital market reform in China
• Podcast: The role financial reform plays in transitioning China's growth model
• Podcast: What experiences can China borrow from US in economic reforms?
• Podcast: Why will China become world's fastest-growing consumer market?

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