On the afternoon of October 12, 2019 International Forum for China Financial Inclusion (IFCFI) was held. Participants witnessed the official release of The Report of Financial Inclusion Development in China (2019) (Green Paper), a year-long work product of CAFI.
At the ceremony, Dr. Mo Xiugen, research director of CAFI, on behalf of all researchers, introduced the theme, the outline and highlights of this year's green book.
(Xiugen Mo’s full speech is as follows:)
It gives me great pleasure to present The Report of Financial Inclusion Development in China (2019) (Green Paper) (hereby referred to as "the Report"). In recent years, CAFI has been following closely on the development of financial inclusion. This year's perspective is "inclusive, healthy and responsible finance".
Inclusiveness is the essence of financial inclusion. Financial inclusion or inclusive finance is healthy finance and good finance. To this end, financial institutions need to provide responsible financial products. Therefore, we believe that financial inclusion need to be inclusive, healthy and responsible.
Why inclusive finance? What is the relevance to the macro economy?
Two years ago, President Gang Yi pointed out at IFCFI that financial inclusion was facilitative to economic growth. We followed and studied this topic this year, and we believe that financial inclusion is closely related to sustainable development as it promotes balanced development by providing financial services for some vulnerable groups (low-income groups, MSMEs).
The Report reviews China's economic development in the past decades, which we believe lacks inclusive growth.
The economic gap between urban and rural areas in China in recent decades is related to the economic growth rate, rather than the economic aggregate. If the gap increases when the economy grows and vice versa, the economic growth is not inclusive. Financial inclusion promotes inclusive economic growth and even sustainable development by providing financial infrastructure for low-income people. The Report discusses on the following topics, how to take measures, how technology improves inclusive growth, how existing large financial institutions can realize the transformation from traditional financial services to inclusive financial services, and inclusive supervision.
For the first time in the Report, financial health is considered as an important factor affecting the development of financial inclusion. It refers to a higher requirement for financial inclusion that financial consumers should have a good financial situation. In the past, when we talked about financial inclusion (inclusive finance), we emphasized equal opportunities. This year, we highlight healthy finance, which means the financial sector should not just provide financial products but also these products need to yield good results. Financial inclusion should not be a luxury but need meet the basic needs of consumers, and improve people's living standards. That is the primary principle.
The Report proposes how to measure healthy finance and how to judge whether the services we provide achieve a healthy result from the following aspects:
1. The services we provide should enable consumers to have a stable and reasonable income structure.
2. When consumers in need, the services we provide shall enable consumers to have emergency funds or fixed assets to deal with the emergecy.
3. We should provide services that enable consumers to have a reasonable debt structure, rather than over lending. No matter they are a family, an individual or an enterprise, they should have a reasonable debt structure and available lending channels.
4. The services we provide should enable consumers to have appropriate insurance against risks.
In addition, our service needs to satisfy our customers. Our financial satisfaction should reflect the satisfaction of our customers. We should also instill confidence into our customers. It is certainly not good finance if the financial services cannot help our customers be upbeat about the future.
The Report analyzes the health status of Internet financial customers. The specific results please refer to the Report and I will not elaborate here.
P2P is also discussed, including its impact on the customer’s financial health, whether it is harmful or beneficial, and the correlation between cash loan and financial health.
Another important content is responsible finance.
If we provide irresponsible products, it is possible to damage the consumer’s financial health, especially the vulnerable groups’. Due to information asymmetry, responsible finance means transparent, inclusive and fair financial services and products. "Customer-oriented" aligns with the Chinese motto of "people-oriented". Under the framework of financial inclusion, "customer-oriented" means to focus on the financial needs of MSMEs and responsible finance requires us to provide continuous financial services.
To that end, the services of financial institutions should be sustainable. That is why President Duoguang Bei always reiterates the two indispensable goals of financial inclusion, the social goal and the commercial viable goal. If one is missing, then it is not truly inclusive.
We believe that to provide sustainable and responsible finance requires tripartite efforts: government, financial institutions and consumers themselves.
Other issues are also discussed in the Report, for example, financial institutions should set higher standards, and the government should have a good legal framework.
The Report discusses, with case studies, how the financial platform fulfills its financial responsibility and how to be "customer-oriented". I will not elaborate here.
Financial inclusion is an important means to solve the current urban-rural gap, especially in the financial supply. We believe that financial inclusion can play a critical role in promoting rural development. Other social benefits of financial inclusion are also mentioned in the Green Paper.
Although we have several years of experience in this field, we are at the preliminary stage, and our theoretical, observation and research abilities are yet to be improved. There may be some insufficiencies or mistakes or mistakes in the Green Paper. We stand to be corrected and we welcome your comments and suggestions.
That's my report. Thank you!
(For Dr. Mo's speech slides, please give us your email address, name and organization; if you hope to buy the Green Paper, please call: 010-82502588-801)