Wu Xiaoqiu: What can finance do on the road to ****same wealth?

Wen / former Vice President of Renmin University of China, President of the China Institute of Capital Markets Wu Xiaoqiu

On the road to *** the same affluence, we still need to think first of all about how we can create more and more wealth, so that we have a more solid foundation for the realization of the wealth of the *** the same affluence. From the institutional level, how to stimulate people's enthusiasm, creativity, to protect the wealth creation mechanism, designed to adapt to the goals of the new period, can let the wealth constantly create a market-oriented system, is still an important task we are currently facing.

***The value basis of the same affluence is ***The same struggle. We need to seriously study how we can realize *** same affluence. The proposal of the goal is certainly important, but if there is a lack of path, system and policy design, the realization of the goal will be difficult.

In my view, the prerequisite for ****same affluence is an ever-abundant wealth base. Chinese society is now still a middle- to high-income country, we are not yet a developed country, and China's per capita GDP in 2021 should be less than $12,000, which is still some distance away from the minimum threshold of a developed country. According to the design of the Fifth Plenary Session of the 19th CPC Central Committee's visionary goals for 2035, China will become a middle-developed country through 15 years of hard work. We must realistically see the reality of China's situation, that is, we are still an upper-middle-income country, we must continue to work hard to create wealth, and we must go through the path of reform and opening up and market economy to accomplish such a goal.

Therefore, on the way to **** the same affluence, we still need to think first of all, how we can create more and more wealth, so that we have a more solid foundation for the realization of the wealth of **** the same affluence. From the institutional level, how to stimulate people's enthusiasm, creativity, and protect the wealth creation mechanism, designed to adapt to the goals of the new period, the ability to allow the wealth to create a steady stream of market-oriented institutions, is still an important task we are currently facing.

This system is, of course, the modern market economy system. Therefore, from the institutional level, it must be to deepen the reform, to make wealth creation has a solid institutional foundation, so that people have confidence, incentives, dreams, goals, a kind of system design without incentives, will not produce abundant wealth creation, and it is difficult to realize the *** with the rich.

We still need to think seriously about the mechanism and source of wealth creation. For this issue, as early as Adam Smith's Wealth of Nations, a more systematic discussion was made.

Among other things, incentives prices are determined by market supply and demand, free markets, transactions, division of labor, and the role of capital, which all constitute important elements of wealth creation. To this day, we must also emphasize the role of science and technology, the international division of labor, and the mechanism of international trade based on comparative advantage, all of which are important elements of wealth creation and formation.

In future economic activities, we must respect these basic rules, so that there will be a steady flow of wealth creation, which will provide a solid foundation for the realization of our future *** with affluence. ***The same affluence is a gradual process, a goal that cannot be achieved overnight, cannot be rushed, cannot be egalitarian, and is not an averaging of stock assets. ***The wealth formation mechanism of the same affluence is very important.

The second level is policy design. When wealth is created, how to design a reasonable distribution policy, which is what we must consider. The distribution mechanism of wealth, from the basic principles of economics, there are initial distribution and redistribution. In modern and civilized societies, there will be a third distribution through value guidance and moral appeal. Through multiple distributions, the operation of society will tend to be harmonious.

In the distribution system, scholars have done a good job of exploring, for example, the primary distribution focuses on incentives, the secondary distribution focuses on fairness, and the tertiary distribution is a kind of social inspiration, a voluntary act, which reflects the degree of civilization of the society. The theory of distribution and its functions are common sense and should not be reversed arbitrarily. The focus of distribution policy must be on primary distribution and redistribution, which is also the core and focus of distribution policy design.

In the distribution policy link, especially the secondary distribution, not only transfer payments, not only a low-income class as well as the poor family assistance, more importantly, the government should provide high-quality public **** products, because the public **** products for all members of the community is equal enjoyment, which is the low and middle-income class and the poor family of a very important supplement, is an effective support and help. support and assistance.

More importantly, we also need to provide poor families and the disadvantaged and low-income groups with a mechanism for capacity enhancement. We need to provide them with fair and good education and basic social security. This is indispensable to the ****same affluence. Let us not focus the second distribution on transfers alone. While transfers are important, what is more important is capacity enhancement.

The third dimension is, what can finance do in the process of realizing **** with prosperity? Finance is an important tool and mechanism for resource allocation. Finance provides a kind of leverage to enterprises, individuals, and regional development. This leverage, if used well, can promote economic development. We need to seriously study the mechanism of the role of finance in the process of realizing *** same wealth.

First, all members of society, regardless of income, status, and assets, and all market players, regardless of composition and size, should have access to financial services that match their credit. China's financial services cannot only serve the rich and the big corporations, but the target of service should be constantly moving downward, slowly covering all members of the society.

Although there is a difference in credit between members of society and all market players, this difference will have an impact on the quality of the services provided. This difference affects the availability of financial services to a certain extent. Because the basis of financial operation is credit, if credit is a black hole, financial services can not be accomplished. Financial services must externalize risk, and if risk is once built in, serious financial risks will arise.

Therefore, financial reform or innovation or financial services, through the necessary means, regardless of whether the means is traditional or new technology means, the purpose is to make the risk external. In the case of risk externalization, maximize the provision of financial services they want to get. This time the financial inclusion will appear.

Inclusive finance is thinking about small and micro-enterprises, thinking about low- and middle-income classes, thinking about poor families, and thinking about what our finance can do for them. This is the basic direction of China's financial reform. The structure and methods of traditional finance can hardly realize such an ambitious goal. We must reform and innovate to achieve this goal.

There are two main ways to reform and innovate finance:

One is to dramatically increase the level of financial technology and to move the financial services chain downward.

It is important to increase the level of financial technology to improve financial inclusion. I am a proponent, supporter, and even advocate of the integration of technology and finance. We can't deny the necessity and inevitability of the combination of technology and finance because of the problems of a certain industry. The combination of technology and finance is actually expanding the scope of financial services, and the essence is to enhance financial efficiency. The combination of science and technology and finance is an important foundation and mechanism for financial services to **** the same wealth, so that the financial realization of inclusive.