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Chinese and American Financial Leaders Speak on "Financial Reform and Social Security in the New Era"


Hosted by the PBC School of Finance of Tsinghua University, the China-US high-level talk took place in Beijing on March 22. More than 20 financial leaders from China and America joined the discussion of "financial reform and social security in the new era". The event was organized by the China Insurance and Pension Research Center and Monetary Policy and Financial Stability Research Center of the National Institute of Financial Research (NIFR) at Tsinghua University, and supported by the Clyde Wu Visiting Scholars Program of Columbia University.

ZHOU Hao, Associate Dean of the Tsinghua University PBC School of Finance (Tsinghua PBCSF), hosted the event. He said that in the new era, reforms in Chinese financial supervisory bodies, the internationalization of the RMB, and the marketization of exchange rate and interest rate will continue to progress. At the same time, innovations in fintech also promote new ideas contributive to a healthier social security system. 

During his opening keynote speech, ZHU Min, Chair of Tsinghua NIFR and former Deputy Managing Director of the International Monetary Fund, stated that in the new era the target for Chinese financial reform is to ensure financial bodies can facilitate the country's real economy, manufacturing sector and consumers. From the perspective of supervision, it is necessary to focus on stability and risks of the macro economy, and putting more focus on the function monitor. He believes that China is not only the world's second largest economy, its fiscal policy and supervisory policy also hold tremendous impacts on global financial stability. The Chinese financial sector ought to continue its opening-up efforts and attract more foreign investors.

Joseph Stiglitz, Nobel Prize Laureate and Columbia University Professor, focused on issues related to social security. He holds the view that the three pillars of pension framework advocated by the World Bank is underperforming. It is mandatory for governments to get themselves involved in the pension and security plans of their citizens. In terms of pension funds investment, he suggested that social security funds should participate in the economic expansion process in order to obtain even better returns on investment, while the funds should also conduct more diversified overseas investment.

Zhou Yanli, former Vice-Chairman of CIRC and Member of the Board of Tsinghua PBCSF stressed the need to properly handle the relationships between financial services to the real economy and virtual economy. The virtual economy is originated from the real economy, and only when the virtual economy serves the real economy, can there be a healthier economy and realize mutual benefits. The Chinese financial sector also demands supply side structural reform. And high leverage financing and the debt-driven growth model also requires high attention. 

Jacob Lew, former Secretary of the Treasury of the United States, described how to combine the financial reform and social security issues together. He believes that a healthy social security safety net will lower the saving rate and help raise consumption. The establishment of a stable and balanced social security system is not only an economic problem but more of a political problem.

After the discussions, Wang Zhongmin, Deputy Chaiman of the National Council for the Social Security Fund of China, and Professor Jan Svejnar, Founding Director of Center on Global Economic Governance at Columbia University, delivered the closing keynote speeches.

Wang Zhongmin used the China’s Social Security Fund as an example to talk about the relationship between the country's social security and financial reform. China’s Social Security Fund has transformed from the planned management to a marketized operation, investment and management model. The Social Security Fund is the market's trailblazer and early participant. It helps guarantee the safety margin and investment return.

Jan Svejnar believes that it is necessary to combine different systems and arrangements in order to ensure that a country, in its different stages, can provide sufficient security and returns. At the same time, the direction of financial reform and social security system are of great importance, with which China has a well start, and it can serve as a valuable reference for many other countries.

Guests presented at the meeting also made comments on the mentioned issues.


>Tsinghua National Institute of Financial Research