Exploring Financial Development with Chinese Characteristics: Xi Jinping's Practices in Fujian (Part 1)
Chapter 1 - Theoretical Foundations and Salient Features of the Path of Financial Development with Chinese Characteristics
In today’s piece, we are briefing you on the first chapter of our report, “Exploring Financial Development with Chinese Characteristics: Xi Jinping's Practices in Fujian.” We would love to answer any questions you might have so be sure to drop a like, comment, and subscribe for more!
Since the 18th CPC National Congress in 2012, the Party Central Committee with Xi Jinping at the core has attached great importance to financial work. By integrating the basic tenets of Marxism with China's specific realities and fine traditional culture, it endeavors to grasp the laws of financial development in the new era and continuously promotes practical, theoretical, and institutional innovations in the financial sector and spares no effort to blaze a distinctive path of financial development with Chinese characteristics.
1. Theoretical Foundations of the Path of Financial Development with Chinese Characteristics: Result of the "Two Integrations"
"We must adhere to the integration of the basic tenets of Marxism with China's specific realities and fine traditional culture." The important statement on the "Two Integrations" put forward by General Secretary Xi Jinping serves not only as the fundamental guideline for the CPC's theoretical innovation, but also provides ideological guidance for the path of financial development with Chinese characteristics.
Chinese Practice of Marxist Theory on Finance
"Seeking truth from facts and proceeding from realities" is the principle consistently adhered to by the CPC in different historical periods. As General Secretary Xi Jinping emphasized: "We must base ourselves on China's national conditions, proceed from China's realities, accurately grasp the characteristics and the rules governing the China's financial development, and avoid copying other countries' development model blindly." "We should deepen our understanding of the nature of finance, base ourselves on China's realities, and blaze a path of financial development with Chinese characteristics." These important discourses give full expression to the Marxist positions, viewpoints, and methods.
Based on key theories such as the labor theory of value and the surplus value theory, Marx and Engels developed a financial framework covering categories such as currency, credit, banks and capital, profoundly disclosing the essence, operational laws and development characteristics of finance. In exploring the path of financial development with Chinese characteristics, the CPC has always centered on the central tasks of the Party and the state, grasped the changes in the principal contradiction facing Chinese society in different development stages, scientifically analyzed the situation facing financial reform, development and stability, and carried out financial work creatively. Such practical innovations have continuously promoted the adaptation of Marxist theory on finance to the Chinese context and the needs of times.
Modern Transformation of Fine Traditional Chinese Culture
To pursue financial development with Chinese characteristics, it is essential to draw strength from China's profound traditional culture—its "root and soul." Through creative transformation and innovative development, traditional culture has injected into China's financial growth a cultural gene of upholding integrity and innovation, and pursuing goodness and progress, while providing spiritual support for the CPC in leading and advancing financial causes.
The practice of inclusive finance, which ranks among the world's best, effectively implements the philosophy of "regarding the people as the foundation of the state"; green finance demonstrates the traditional Chinese concept of "promoting harmony between humanity and nature"; and traditional governance wisdom such as "be more mindful of potential dangers" and "be consistent with its capacity" has been transformed into prudential regulatory principles in the financial sector... The path of financial development with Chinese characteristics not only follows the general laws of market economy, but also embodies distinct features of Chinese culture. This is a clear manifestation of the "Two Integrations" in the financial sector, establishing the unique advantages of the path of financial development with Chinese characteristics.
2. Salient Features of the Path of Financial Development with Chinese Characteristics
Through years of explorations and continuous development, the path of financial development with Chinese characteristics has demonstrated prominent features: the integration of political leadership and professional guidance, the coordinated advancement of efficiency and fairness, and the dynamic balance between autonomy and openness. It has forged unique paths in serving national strategies, promoting common prosperity for all, preventing systemic risks, and enhancing global financial governance.
2.1 Integration of Political Leadership and Professional Guidance: The Key to the Party's Leadership over the Financial Sector
General Secretary Xi Jinping emphasized that "finance is a core competitiveness of a country, and financial security is an important part of national security," elevating financial governance to the level of national strategic capability building.
The organic integration of political leadership and professional guidance constitutes the key to the Party's leadership over the financial sector. On one hand, by upholding the centralized and unified leadership of the CPC Central Committee over the financial sector and leveraging the Party's role as the core leadership coordinating all efforts, China ensures that the CPC Central Committee retains firm control over the financial sector and guarantees the correct direction of financial development. On the other hand, it demands adherence to laws governing economic and financial operations, while fully enabling the market to play a decisive role in financial resource allocation.
General Secretary Xi Jinping summarized the essence of the path of financial development with Chinese characteristics as "Eight Upholds." Among them, "Upholding the centralized and unified leadership of the CPC Central Committee over the financial sector" tops the list, embodying the most fundamental feature of this path. It highlights the greatest political advantage and the merits of the socialist system of China's financial development.
Through deepening reforms in its financial regulatory system, China has established a comprehensive institutional framework that ensures the Party's leadership over all financial work. The establishment of the Financial Stability and Development Committee of the State Council in 2017 safeguarded national financial stability through a coordinated approach. The establishment of the Central Financial Commission and Central Financial Work Commission in 2023 strengthened the CPC Central Committee's unified and centralized leadership over the financial sector. These institutional innovations ensure financial reforms advance toward the correct direction while providing institutional guarantees against systemic risks.
China's socialist market economy has consistently upheld the principle of properly handling the government-market relations. It is a principle that consistently guides financial work. From advancing interest rate liberalization to innovating and improving macroeconomic regulation, from curbing disorderly capital expansion to prioritizing financial services for the real economy, and from deepening financial supply-side structural reforms to establishing macro-prudential policy frameworks, all these reflect the Party Central Committee's deep understanding of financial principles and professional governance of the financial sector. Clarifying how financial work should be approached and conducted, the "Eight Upholds" provide both a guiding philosophy and a practical methodology, marking a new height in the CPC's comprehension of the essence and development laws of finance.
China's financial work, representing the organic integration of political leadership and professional guidance, can avoid the chaos of Western financial liberalization while overcoming the rigidities of the planned economy era. This approach has yielded significant results: strengthened capacity to serve high-quality development and enhanced risk prevention and control capabilities.
2.2 Coordinated Advancement of Efficiency and Fairness: "Finance for the People" as the Core Principle
Balancing efficiency and fairness is essential for high-quality development. The path of financial development with Chinese characteristics advances both objectives in a coordinated way—enhancing resource allocation efficiency while ensuring fairness.
General Secretary Xi Jinping emphasized that "The economy is the body, finance its lifeblood." In forging the path of financial development with Chinese characteristics, China prioritizes deepening supply- side structural reform in finance, elevates financial service efficiency and quality, and works hard to meet socioeconomic needs. China's financial sector has transitioned from a mere banking service provider into a modern system that effectively allocates resources and supports the real economy.
While enhancing financial service efficiency, China has consistently prioritized safeguarding the fundamental interests of the people and meeting their financial needs. Xi Jinping, general secretary of the CPC Central Committee, emphasized repeatedly: "People-centered approach must be adhered to as its value orientation". Innovations in the financial poverty alleviation mechanism bolstered complete victory in the fight against poverty. Structural monetary policy tools were leveraged to enhance financial services for the private sector and micro and small enterprises. Measures including establishing and improving the deposit insurance system and managing investor suitability have formed a "financial safety net" to protect people's assets... Upholding the people-centered philosophy vividly reflects the fundamental principle of wholeheartedly serving the people. Thus, the path of financial development with Chinese characteristics is different in nature from the capital-centered mode of Western financial development.
2.3 The Dynamic Balance Between Autonomy and Openness: The Strategic Choice for China's Finance
The path of financial development with Chinese characteristics features and promotes the dynamic balance between autonomy and openness. Based on China's own realities and distinct features suitable for China's national conditions, it maintains openness and inclusiveness, while steadily advancing the high-level institutional opening-up in the financial sector, and sharing development opportunities with the world.
Adhering to China's own path is the hard-earned wisdom gained through the Party's hundred-year struggle and exploration. Promoting finance with Chinese characteristics must also follow its own path. General Secretary Xi Jinping pointed out that "the path of financial development with Chinese characteristics not only follows the way for the development of modern finance, but also has distinctive features that suit China's national conditions, and thus it is different in nature from the mode of Western financial development. We should have more confidence and continue to explore and improve our work in the financial sector, so that this path will become wider and wider."
Different from some Western countries that advocate the financial sector's development path of excessive expansion and detachment from the real economy, China upholds the fundamental principle that finance serves the real economy. General Secretary Xi Jinping pointed out that "to maintain the stable and healthy development of the economy, we must do a good job in finance" and that "the financial sector should serve the real economy and meet the needs of economic and social development and the people." Instead of adopting the Western "post-event firefighting" regulatory approach, China adheres to making risk prevention and control the enduring mission of financial work. It enhances the forward-looking thinking of risk management, i.e., "risks must be identified, warned, revealed and handled as early as possible, and the mechanism for rectifying financial risks at an early stage with hard constraints must be refined."
China's transition from a financially large country to a financial powerhouse requires not only upholding autonomy and independence, but also drawing on advanced international financial concepts and methods, and actively participating in global financial governance. General Secretary Xi Jinping emphasized that "We must promote the opening up of the financial sector actively and prudently" and "enhance the global competitiveness of the financial sector by expanding high-standard two-way financial opening-up, while strengthening economic and financial management capabilities and risk prevention under open conditions." The inclusion of the renminbi (RMB) in the International Monetary Fund's (IMF) Special Drawing Rights (SDR) currency basket; the addition of A-shares and Chinese bond markets into global indices; and the launch of the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB) demonstrate the increasingly important role of China's financial industry in the global financial landscape.
Chapter 2-3: To be Continued…