Exploring Financial Development with Chinese Characteristics: Xi Jinping's Practices in Fujian (Part 3)
Chapter 3 - Chinese Experience That Inspires the World
In today’s piece, we are briefing you on the third and last 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!
The essential significance of China's characterized path of financial development lies in charting an institutionalized course toward "finance for the good of all" by reconstructing a new type of contractual relationship between finance and society. The Chinese approach offers a practical response to this global challenge by transforming finance from a "Leviathan" for capital self- expansion into a driving force for human development, social justice and equity. The most profound inspiration for other countries from China's financial governance model lies in its triple paradigmatic transformations in financial governance—achieved by integrating the institutional advantages of Party leadership and market mechanisms: transforming finance from a speculative "money game" dominated by Wall Street into a "blood supply system" that supports the real economy; from a "wealth-concentrating tool" for the privileged few into an inclusive "resource allocation hub" that drives shared prosperity; and from a "source of systemic volatility" into a "shock absorber" that safeguards financial stability. This Chinese wisdom shows that when finance is effectively embedded in the national governance framework, its potential to serve the common values of humanity can be greatly unleashed.
1. A New Paradigm of Symbiotic Prosperity Between the Economy and Finance
Since the 1970s, capital-led economic and financial systems have increasingly decoupled from the real economy. Financial capital has developed mechanisms of self- reinforcing accumulation and expansion, leading to a growing imbalance between the financial sector and the real economy. In the 1990s, American economist Paul Sweezy warned that "the inverted relation between the financial and the real is the key to understanding the new trends in the world."
In the late 1970s and 1980s, facing intensified competition from Japan and Germany, the profit margins of the U.S. real economy declined. Financial capital turned increasingly toward short-term gains, as reflected in the rapid growth of the junk bond market and a shift in corporate governance toward maximizing shareholder value. These changes significantly accelerated the decline of U.S. manufacturing, with its share of GDP dropping from 27% in 1960 to around 10% today, and manufacturing employment falling from a peak of nearly 20 million in 1979 to just over 12 million. Following the 2008 global financial crisis, the United States attempted to promote the reshoring of manufacturing. However, decades of globalization had formed highly integrated industrial chains that proved resistant to easy reversal by political means. The contradiction between financial capital's short-term profit-seeking and the long investment cycles required by manufacturing remains unresolved.
Today, the self-circulation of finance and the trend of capital shifting away from the real economy toward virtual speculative activities have aroused growing concern and reflection in many countries. General Secretary Xi Jinping has made the important observation that "the economy is the body, and finance is the lifeblood; the two are symbiotic and thrive together." He has emphasized that "serving the real economy is the bounden duty and fundamental purpose of finance, and the key to preventing and defusing financial risks." As early as his tenure in Fujian, Xi Jinping had developed deep insights into on financial services for the real economy. He clearly pointed out that economic development and the prosperity of the fiscal, taxation and financial sectors are mutually reinforcing, and stressed the need to properly handle the relationship between financial work and other areas of economic development. In practice, steadfastly adhering to the principle of driving financial reform and innovation through its service to the real economy, Xi Jinping continuously promoted the improvement of financial service capabilities and guided financial institutions to actively support companies, help them overcome challenges, and provide effective capital supply, thereby ensuring and fostering healthy and stable economic development.
Since the 18th National Congress of the CPC, China has adhered to the fundamental principle that finance must serve the real economy. The government has taken a series of targeted measures: building a multi-tiered financial system to meet the diversified demands of economic and social development; improving the transmission mechanism of monetary policy to the real economy to reduce financing costs for enterprises; channeling more financial resources to key areas such as advanced manufacturing, new infrastructure, and new energy; promoting institutional innovation in green finance to support the national goals of carbon peaking and carbon neutrality; and accelerating financial digitization and technological empowerment to enhance service efficiency to the real economy. These efforts have led to improvements in the structure, policies, institutions, and technologies of China's financial system, providing strong support for national strategies such as building a manufacturing powerhouse, advancing rural revitalization, and promoting green transformation. They have also helped consolidate the foundation for high-quality economic development.
China's emphasis on directing finance toward serving the real economy offers valuable governance paradigm for the global community. At its core is the construction of a synergistic ecosystem in which finance and industry prosper together, effectively avoiding the structural crises caused by the alienation of financial capital that have emerged in certain Western economies. This development philosophy holds important reference value for developed countries grappling with the challenges of shifting from the real economy to the virtual economy, and offers an institutional reference for emerging markets seeking industrial upgrading, financial inclusion, and sustainable growth.
2. Inclusive Finance: A Benchmark for Global Practice
Inclusive finance serves as a litmus test for assessing the inclusiveness and fairness of a country's financial system. In both international and domestic dimensions, the Western-led financial governance model is increasingly revealing deep-rooted structural inequities. At the global level, Western financial institutions have long exported lending rules and financial standards to the Southern countries under the banners of "marketization," "privatization," and "tax reduction." Domestically, structural inequality, discriminatory credit systems, and commercial financial limitations have made it difficult for inclusive finance in Western countries to escape the dual dilemmas of unequal service quality and heavy burdens on disadvantaged groups.
In contrast, China has explored a viable and effective path in building an inclusive financial system. The Communist Party of China has always prioritized the fundamental interests of the people. Inclusive finance has been elevated to a strategic level in efforts to eliminate absolute poverty and promote common prosperity. General Secretary Xi Jinping has stressed that "we must adhere to a people- centered development philosophy, promote the high-quality development of inclusive finance, and improve a modern financial system that is adaptive, competitive, and inclusive." On one hand, China has promoted inclusive finance through a coordinated approach of policy guidance and market mechanisms. It has steadily expanded access to and increased the amount of basic financial services, such as credit, insurance, and payments, at the county and village levels, achieving the goals of "institutions in every township, services in every village, and accounts in every household." These efforts have empowered underdeveloped regions and disadvantaged groups to boost production, mitigate risks, and increase income. On the other hand, China is at the forefront of the world in improving the coverage and efficiency of digital financial inclusion. Through financial innovation enabled by digital technologies, services such as mobile payments, digital credit, and scenario-based insurance have significantly improved accessibility in remote and rural areas. These innovations have effectively helped low-income groups integrate into the digital economy, ensuring that micro, small, and medium- sized enterprises, as well as low-income and vulnerable populations, share in the benefits of financial development.
The idea of "benefiting the people and bringing well-being to all" is deeply embedded in China's traditional culture. This philosophy served as the cornerstone of Xi Jinping's financial poverty alleviation efforts in Fujian, where he explored a Chinese-characterized approach to financial work by leveraging targeted financial measures to eradicate poverty. He devoted significant attention to improving financial services in impoverished regions and for vulnerable sectors and populations. He proposed establishing a microcredit operation mechanism adapted for women in impoverished areas, designed to foster mutual support, peer learning, collective guarantees, and reciprocal oversight. He also leveraged fiscal funds to attract bank loans, thereby advancing shantytown renovation projects. Furthermore, he introduced the innovative concept of "living timber loans" and consistently championed forest tenure reform, laying a robust foundation for financially empowering the forestry sector and forest areas.
China's inclusive finance model has evolved with increasing depth and innovation driven by continuous exploration. Drawing on nationwide experiences in rural property rights transaction financing practice, Ningde led the way in Fujian Province by introducing a rural production factor circulation financing mechanism, bringing "dormant" rural resources like forestry and tea plantations into active use. Building on this foundation, it rolled out innovative credit products such as fish raft aquaculture loans, FuHai Loans, and FuCha Contract Loans, alongside price index insurances for grapes, gardenias, and large yellow croakers, and innovative insurance products like the Gutian oil-tea camellia weather index insurance. These initiatives boosted the development of specialized agricultural industries and serve as a model for inclusive financial innovation in the Global South. In April 2019, a delegation from Laos visited Ningde to study China's experience in targeted poverty alleviation. This reflects the growing international influence of China's inclusive finance practices.
3. Pioneer in Green Finance
"We were the ones whose blood, sweat and tears financed the industrial revolution. Are we now to face double jeopardy by having to pay the cost as a result of those greenhouse gases from the industrial revolution?" This forceful statement by Mia Mottley, Prime Minister of Barbados, at the 27th United Nations Climate Change Conference (COP27) starkly revealed the structural inequities embedded in global climate governance.
For countries across the Global South, there is growing consensus that breakthroughs in green financial instruments are essential to dismantling the structural constraints of climate finance, reconstructing the foundational logic of financial flows, and rewriting the narrative of "climate colonialism." An expert has introduced the concept of "green debt restructuring," calling for the integration of ecological and climate-linked conditions into sovereign debt negotiations, which provides a path to simultaneously address the intertwined crises of climate vulnerability and excessive debt in the Global South.
China, as a forerunner in green finance system innovation, has led the transition from concept to practice. It has established the world's largest and most comprehensive green finance ecosystem: the outstanding balance of green credit has exceeded RMB 40 trillion; green bond issuance ranks first globally; and the national carbon emissions trading market now covers major sectors including electricity, steel, and cement. At the heart of this system lies a transformative financial logic: "converting resources into assets, assets into capital, and capital into forces for ecological restoration." Institutional innovations in green credit, green certification, and carbon finance have been functional through mechanisms for property rights clarification, pricing, insurance, and guarantees, enabling natural capital to become pledgable, tradable, and value-enhancing modern financial assets.
Fujian Province offers a practical local template for green finance implementation. As early as 1987, Xi Jinping initiated the concept of "living timber loans" in Ningde, enabling forest farmers to obtain loans using trees not yet harvested. Today, Fujian has launched an upgraded portfolio of green financial products, including "Forest e-Loans, " "Carbon Sink Loans," and "Blue Carbon Index Insurance." Forest farmers can use digital platforms to measure future carbon sequestration and translate it into creditworthiness. Fisherfolk mitigate income fluctuations during mangrove restoration through blue carbon insurance. Local governments reduce green financing costs via interest subsidies and re-lending mechanisms, forming a closed-loop model that integrates "ecological restoration–green industry–community income–debt sustainability." This model not only activates dormant ecological resources but also renders capital participation in environmental governance both profitable and risk-manageable. It embodies in financial terms the Chinese philosophy that "lucid waters and lush mountains are invaluable assets." It offers the Global South a replicable model for green financial development.
4. An Open and Inclusive Model of Financial Cooperation
The international financial system is undergoing a profound adjustment since the dissolution of the Bretton Woods system. On one hand, under the doctrine of "America First," the United States has aggressively promoted its trade protectionism and unilateralism, substantially eroding the framework of multilateral cooperation. The continued escalation of financial sanctions and extraterritorial jurisdiction has led to the weaponization of the U.S. dollar, while mounting sovereign debt levels are eroding global trust in both U.S. Treasury securities and the dollar's international credibility. On the other hand, the rapid evolution of financial technologies has brought forward new challenges such as "data sovereignty" and "access barriers", prompting many developing nations to show growing vigilance about potential problems such as "digital colonialism." Amid these converging risks, the global financial order is evolving rapidly from a formerly "unipolar and stable" structure toward a more "balanced and multipolar" configuration.
In this context, the pursuit of an open and inclusive model of financial cooperation has become not only an inevitable choice for countries to address uncertainties and challenges, but also a defining feature of China's financial development path. Pioneering strategic foreign investment in China's banking sector, taking the lead in establishing financial systems in special economic zones, being the first to borrow foreign debt for infrastructure development, and the first to establish foreign exchange adjustment centers, among other initiatives—during his tenure in Fujian, Xi Jinping, based on Fujian's specific conditions, vigorously promoted financial reform and opening up, which provided strong financial support for Fujian's economic and social development.
In recent years, China has steadily advanced the institutional framework for financial opening-up policies. The country has optimized cross-border financial products and services, enhanced the facilitation of trade and investment, and accelerated two-way market access in sectors such as equities, bonds, funds, and wealth management. These efforts offer broader opportunities and improved transparency for global investors. China adheres to a dual-track strategy of "bringing in" and "going global." It is expanding institutional openness in the financial sector in an orderly manner, encouraging greater participation from foreign financial institutions and long- term capital. These efforts have significantly enhanced the international competitiveness of China's financial industry. At the same time, China has actively participated in the reform of global financial governance and has deepened international financial cooperation. Through multilateral platforms such as the G20, the International Monetary Fund (IMF), and the Bank for International Settlements (BIS), China is advancing macroeconomic and financial policy coordination. By combining multilateral mechanisms, regional cooperation, and bilateral dialogues, China is contributing new solutions to global financial governance.
5. China's Approach to Financial Risk Prevention and Control
From systemic shocks such as the U.S. subprime mortgage crisis and the eurozone sovereign debt crisis, to incidents like the Credit Suisse turmoil and the collapse of Silicon Valley Bank, developed Western economies have witnessed a series of high-impact financial risk events. These cases have laid bare the inadequacies of Western financial regulation and the failure of their early warning mechanisms.
In stark contrast, China stands as one of the very few major economies to have avoided a systemic financial crisis over the past several decades. It has achieved two remarkable feats: sustained rapid economic growth and long-term social stability. These outcomes are deeply rooted in China's distinctive financial governance. Under the centralized, unified financial leadership of the Party Central Committee, China upholds a people-centered philosophy of financial development. This guiding principle ensures that efforts to stimulate financial dynamism and enhance services to the real economy are consistently balanced with regulatory oversight and the prevention of unchecked financial expansion. Over years of institutional evolution, China has built a robust and proactive regulatory architecture. It has improved its risk monitoring and assessment systems, upheld the principles of early identification, early warning, early exposure, and early resolution, and significantly enhanced its financial stability safeguards. A uniquely Chinese regulatory model: "Party leadership over finance + macroprudential oversight + functional supervision" is now gaining recognition as a new paradigm for ensuring global financial stability.
Xi Jinping's financial governance experience in Fujian Province reflects the enduring relevance of risk awareness and bottom-line thinking rooted in China's characteristic financial system. At a time when global financial risks are rising and spillover effects intensifying, China's approach has gained growing international traction. Through strengthening unified leadership of the Party Central Committee over financial affairs, China ensures synchronized development between the financial system and the real economy. By prioritizing systemic risk prevention, adhering to a people-centered philosophy, and deploying tools such as counter- cyclical adjustment and prudent balance sheet management, China has avoided speculative bubbles while ensuring sustainable capital support for economic activities. The International Monetary Fund (IMF), in its analytical reports, has affirmed the effectiveness of China's macro-prudential tools and recommended them as a reference for other emerging economies.
Conclusion
China's distinctive path of financial development is theoretically grounded in the integration of Marxist fundamental principles with the country's national realities and its rich essence of traditional culture. This path has underpinned China's great national rejuvenation with robust financial strength. With the Eastern philosophy of harmonious coexistence and the unity of the greater good and shared benefits, China contributes its approach to global financial governance.
At this new historical juncture, the path of financial development with Chinese characteristics, embodying the institutional strengths of socialism and the contemporary value of Chinese civilization, will eventually give rise to a modern financial civilization that is both uniquely Chinese and globally significant. This will be a vital contribution of Chinese wisdom to global efforts in addressing financial risks and challenges.