Wealth management reforms underway

Projects to lift China's financial power, social services, transformation, Xie Chuanjiao reports.

The fast growth of the wealth management sector has become a hallmark of Qingdao's financial industry, which is boosting the city's growth by pushing forward its economic restructuring and business model update.

After the State Council approved the Qingdao Wealth Management Financial Comprehensive Reform Pilot Area in February 2014, Qingdao has strived to explore new approaches to develop its wealth management sector, said Liu Mingjun, vice-mayor of Qingdao.

"The city is focusing on developing a diversified portfolio of wealth management institutions, a multifunctional wealth management market," he said.

"Meanwhile, we have been pushing for financial reforms and improving financial risk prevention capabilities with an aim to optimize the wealth management development environment and leverage wealth management to facilitate the growth of the real economy." By 2018, there will be 2.11 million Chinese people who own individual assets worth more than $1 million, according to the Global Wealth Report released by Credit Suisse Group. "The demand for wealth management and appreciation and its insufficient service supply at present have made it clear that the pilot projects for wealth management in Qingdao is bound to play a pivotal role in lifting China's financial power, social service and growth model transformation," Liu said. Since February 2014, the development committee for Qingdao's wealth management pilot has worked out a raft of reform proposals.

Various ministries have approved 35 new policies and strategies, many of which are now in force. In addition to encouraging wealth management service providers to develop innovational products, the policies also include pilot schemes for qualified foreign limited partners and domestic limited partners, which will enable overseas investors to convert foreign currencies into yuan for private equity investments in China and raise funds to invest abroad.

Multinational companies have also benefited from the reforms as foreign direct investment can now be processed in local banks instead of applying to the State Administration of Foreign Exchange, and they are allowed to conduct double-way cross-border renminbi cash pooling and centralized renminbi payments and settlements.

Enhancing supervision of the industry to ensure financial security is also a focus, with a number of ini tiatives prescribed in the reform proposals.

Pilot schemes will be conducted to protect wealth management client information with strict procedures regulating collection, search and use of client information to secure client privacy and asset safety.

A wealth management information monitoring system will be developed to cover banks, securities, future goods, funds and insurance companies and domestic credit rating agencies are encouraged to appraise wealth management institutions and their products.

"With a string of innovative reforms and preferential policies launched, Qingdao has attracted financial businesses from across the world to its budding development as a global management center," Liu said. Currently, 205 financial institutions, including 10 private banks that manage 50 billion yuan ($8 billion) in combined assets operate in the city.

Drawn to the opportunities in the burgeoning market, independent wealth management institutions, including Noah Wealth and Credit Ease, have also arrived.

In addition, a number of multifunctional wealth management platforms are also under preparation, including the Haier United Credit Equity Exchange, the Qingdao International Asset and Equity Exchange and the Qingdao Commodity Transaction Service Center. The city has enhanced cooperation with top educational and research and development institutes to train professionals crucial to success in wealth management, Liu said.

In March, the China Finance 40 Forum signed an agreement with the Qingdao municipal government to build a financial academy in Qingdao.

According to the agreement, the two parties will build a financial academy, a research institute and a foundation.

The academy will be focused on doctoral and masters as well as in-service education programs, and the research institute will be devoted to study in fundamental financial theory, wealth management, innovative finance, financial supervision and industrial practice.

The Shanghai University of Finance and Economics and Shandong University are setting up wealth management-related majors and research institutes. To ensure more people reap the benefits of the financial reforms, an inclusive financial system is being developed in Qingdao, with an additional 50 rural bank branches set up in 2014.

Contact the writer at xiechuanjiao@chinadaily.com.cn

(China Daily 05/25/2015 page12)