Timothy Adams is the President and CEO of the Institute of International Finance (IIF).
People's Daily Online Business Podcast by Li Zhenyu
China is moving toward the next stage of development through a new round of economic reforms, and transforming China's financial sector is essential in rebalancing China's economy.
Timothy Adams, President and CEO of the Institute of International Finance (IIF), recently shared with us his perspectives on China's financial reform. The former Undersecretary for International Affairs at the U.S. Department of the Treasury talked about the unique role financial reform plays in transitioning China's growth model, capital market reform in China, how to solve China's shadow banking dilemma, keys to China's successful financial reform, and the next critical step in the much-anticipated reform.
Financial Reform: Key to Economic Rebalancing
Reforming China's financial sector is widely regarded as a key factor in facilitating China's rebalancing away from an export-driven to consumption-led economy and in sustaining strong economic growth.
Timothy Adams believes that financial sector reform is a key ingredient in a new growth model. And that key ingredient is about better allocation of savings to new growth industries, allowing households and individuals a more diversified and safer portfolio of savings and also allowing households greater returns on their savings, which raise their incomes and allow them a higher standard of living. [More]
Capital Market Reform Helps Create New Funding Channels
It is very important to create new channels of funding in addition to the regular banking sector in China.
Timothy Adams thinks that China has a very vibrant and profitable banking sector, but the country also needs a parallel to that, a capital market structure that allows for the funding of investment projects, the funding of infrastructure, the funding of urbanization, and also allows savers different kinds of assets to own and invest in. [More]
Financial Reform Needed to Tame Shadow Banking
The rise of the shadow banking industry is an indication that financial reforms are needed. According to Moody's, the growth of core shadow banking activities in China has exceeded a cumulative 75 percent over the past two years.
Timothy Adams believes that part of the reason is that savers are looking for higher returns and are getting into standard deposit. He suggested that if China could liberalize interest rates, some of those savings that have gone into shadow banking will return back to the regular banking sector. [More]
Sequencing Critical to Successful Financial Reform
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 believes that a clear roadmap and careful sequencing are two keys to China's successful financial reform. [More]
The Next Critical Step in China's Financial Reform
The financial reform is considered one of the top priorities for China's economic reforms. Beijing has already stepped up its commitment to financial reforms in the past two months with a slew of liberalization measures.
Timothy Adams applauded Beijing's efforts in pushing forward the financial reforms and believes that the next critical step in China's financial reforms is finding the right pace. [More]