Exploring Financial Development with Chinese Characteristics: Xi Jinping's Practices in Fujian (Part 2)
Chapter 2 - Source of Vitality of the Path of Financial Development with Chinese Characteristics
In today’s piece, we are briefing you on the second 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!
During his 17-and-a-half-year tenure in Fujian, Xi Jinping led the province's reform and opening-up, and modernization drive. His in-depth research and forward-looking thinking on critical financial issues generated many original concepts, transformative practices, and landmark outcomes, providing a source of vitality and important guidance for blazing a path of financial development with Chinese characteristics.
1. Financial Exploration Against the Backdrop of Reform, Opening-up, and Modernization
At the early stage of reform and opening up, China explored how to establish a socialist market economy while advancing reforms on market-based allocation of financial resources and financial mechanisms. During this process, the country drew on financial theories and practices from developed European and American countries. This engagement, however, presented critical questions for Chinese policymakers at all levels: How does China's financial sector fundamentally differ from Western model? What development pathway should China take? How should finance's political dimension be understood?What role must finance play in advancing socialism with Chinese characteristics?
From June 1985 to October 2002, Xi Jinping successively worked in Xiamen, Ningde, Fuzhou, and the Fujian Provincial Party Committee and Provincial Government. During this period, China's financial sector underwent a major transformation from a planned economy to a market economy, and from a closed state to gradual opening- up. Events such as the Asian financial crisis and China's accession to the World Trade Organization (WTO) posed multiple challenges and tests. Fujian, as both a pioneering zone of reform and opening-up and a frontline in Taiwan-related affairs, bore special missions and tasks. Simultaneously, in its modernization journey, Fujian faced practical issues such as accelerating its own development and bridging urban-rural and coastal-inland development gaps.
From the reform and opening-up to the beginning of the new century, both the internal and external environment and phased goals and tasks of China's financial development have continued to evolve. The financial discourses and practices of Xi Jinping during his tenure in Fujian also evolved with the times. The main principles can be summarized as: deeply grasping the changes in the global situation, understanding the realities of the country and the province, and promoting finance to adapt to the socialist market economy, the new expectations of social livelihood, and the process of globalization.
2. Financial Governance Footprints of Xi Jinping in Fujian
Xi Jinping's service extended across Fujian, from special economic zones to underdeveloped mountains, from bustling cities to remote villages, and from factories to farmsteads. His evidence-based research and fieldwork enabled pioneering innovations in financial policy and practice that are highly forward-looking, groundbreaking and strategic,establishing rich and valuable legacy for China's financial development.
2.1 Blazing a Trail for Financial System Reform
In October 1980, Xiamen Special Economic Zone was officially established to undertake the important missions of serving as a "testing ground" for reform, a "window" for opening up, and a "vanguard" for modernization. In June 1985, Xiamen Special Economic Zone was expanded to the entire island. It was at this time that Xi Jinping came to work in Xiamen.
At that time, Xiamen faced outdated urban landscapes, a weak economic foundation, underdeveloped financial facilities, and severe capital shortages. Moreover, there was little experience to draw on regarding how to advance financial reform and opening-up in the special economic zone. At the time, Xi Jinping took charge of planning, fiscal affairs, taxation, and financial operations while concurrently heading leading bodies such as the Financial System Reform Leadership Group and the Special Economic Zone Management and Development Committee, taking exceptionally demanding responsibilities. He believed that "as a leader, one should focus on the present while keeping an eye on the future, be willing to do preparatory work, and take on tasks that may not yield immediate results." Guided by this concept, shortly after arriving in Xiamen, Xi Jinping took the lead in establishing the Economic and Social Development Strategy Research Center and presided over the formulation of the 1985- 2000 Xiamen Economic and Social Development Strategy.
This is the first 15-year economic and social development strategic plan formulated by a local government. It dedicated a special chapter to the development strategy for Xiamen's finance and, for the first time nationwide, put forward the concept of "offshore finance". According to Wu Guopei, a teacher at Xiamen University at the time when he participated in the formulation work, the strategy outlined Xiamen's financial development model with phased goals and tasks, and put forward a special economic zone financial framework under the leadership of the People's Bank of China, with specialized banks as the mainstay, supplemented by multiple local financial institutions, featuring coexisting multiple financial components that work in a division- of- labor and collaborative way.
In response to the requirements of establishing a financial system tailored to the development needs of the special economic zone's export-oriented economy and leveraging the advantages of the zone to gain financial reform experiences, Xi Jinping drafted and introduced the Xiamen Financial System Reform Plan. This plan covered many aspects such as establishing a special zone financial system, commercializing specialized banks and other financial institutions, establishing and developing diversified financial institutions, improving credit management, establishing and perfecting financial markets, enhancing settlement methods, and improving foreign exchange and external debt management, which is often referred to as the well-known "Seven Financial Reforms."
Under the leadership of Xi Jinping, Xiamen took the lead in multiple financial reforms: establishing the first special economic zone financial system, utilizing foreign debt to advance infrastructure construction, setting up a foreign exchange adjustment center, promoting the commercialization of financial institutions, establishing the overseas Chinese investment companies and local insurance agencies, and founding the first Sino- foreign joint- venture bank in China. These pioneering reform measures injected strong vitality into Xiamen's financial sector. Meanwhile, they have become valuable experience for financial system reforms and development across the province and the entire nation.
2.2 Innovative Practices in Poverty Alleviation via Financial Tools
In the 1980s, Xiadang township in Shouning county, Ningde prefecture, was identified as a provincial-level poverty-stricken township, situated in a remote area with severe poverty and underdeveloped conditions. When Xi Jinping worked in Ningde, he visited Xiadang three times to solve problems on the spot and promote its development.
Wu Chengju, then deputy governor of the People's Bank of China Ningde Prefecture Branch, recalled: On July 19, 1989, upon Xi Jinping's arrival in Xiadang Township, local administrative villages did not yet have a rural credit cooperative. Rural financial services are vital for poverty alleviation and prosperity, and rural credit cooperatives must be deeply rooted in rural communities to effectively provide credit for poverty alleviation.
Under Xi Jinping's instructions, local financial authorities promptly improved rural financial institutions and agricultural financial services. In the same year, they guided the upgrade of Xiadang Township's Credit Station to a full Rural Credit Cooperative and bolstered its human resources and technical capabilities, thereby filling the void in financial services in Xiadang.
On July 21, 1989, Xiadang township was hit by a once-in-a-century flood, causing severe losses to people's lives and property. Braving the rain and walking for over an hour, Xi Jinping visited Xiadang for the second time, bringing relief funds and post-disaster reconstruction capital to the affected villagers. Subsequently, the newly established Xiadang Credit Cooperative provided immediate credit support to the affected villagers based on damages to tea plantations, flooded farmland, and waterlogged livestock pens, which enabled their recovery of production and rebuilding of homes.
Thereafter, the People's Bank of China system in Fujian actively planned and innovated rural financial work. It guided rural credit cooperatives, agricultural banks, and other agriculture-related financial institutions to expand networks, unclog channels, improve the rural payment system, and set up inclusive finance service points, offering a wide range of basic financial services to rural residents. Fujian was thus among the first in China to achieve the goal of "financial services accessible within villages".
2.3 Regulating "Biao Hui" and Forestalling and Defusing Financial Risks
"Biao Hui", a form of private financing with financial mutual-aid and wealth-management functions, was once prevalent in Ningde, Fujian in the 1980s and 1990s. Operating outside official regulatory systems, these unregulated networks carried inherent risks due to their opaque structures. When the schemes collapsed—a crisis locally termed "Dao Hui"—they triggered severe threats to public finances and social stability. In late 1988, a major "Dao Hui" event in Ningde took place. It involved over 100 million yuan, affected more than 20,000 people (including government officials), and caused severe consequences.
Xi Jinping, then secretary of the CPC Ningde Prefectural Committee, attached great importance to regulating private "Biao Hui" and safeguarding financial stability. In response to the "Dao Hui" incident, some people proposed that the government issue "Hui Notes", guaranteed by the government as an intermediary. After thorough investigations, Xi Jinping gave three instructions: First, avoid hasty judgments on "Biao Hui" and base decisions on evidence. Second, the government should not issue "Hui Notes". Mediation by non- governmental means should be prioritized in resolving such cases. Third, emphasize the importance of social stability. Governments at all levels should strengthen efforts, conduct meticulous public work, control the situation, and maintain stability. Under Xi Jinping's leadership, Ningde's departments took swift action, effectively curbed the chaos of private "Biao Hui", and ensured regional economic and social stability.
Huamin Company, established in 1980 with the State Council's approval, served as Fujian Province's "window" company in Hong Kong. In 1997, hit hard by the Asian financial crisis and compounded by internal operational and management issues, the company had incurred massive losses and become severely insolvent. Addressing Huamin Company's debt crisis was crucial for Fujian's reputation, and it bore implications for the continued expansion of reform and opening up. After careful deliberation, the CPC Fujian Provincial Committee and Provincial Government decided to restructure and rescue Huamin. At the time, with no precedent to follow, they had to "cross the river by feeling the stones". Xi Jinping took up the matter himself, negotiating with relevant parties, applying to the State Council for foreign exchange quotas, and seeking approval from banks for the scale of renminbi purchases. After two years and eight months of efforts, Huamin Company's restructuring proved successful, emerging as one of the most successful cases of debt restructuring for a Chinese-funded enterprise.
Xi Jinping's profound insights into preventing and mitigating financial risks have effectively steered Fujian's financial development and enabled it to avoid many treacherous currents and hidden shoals on its journey. Fujian has consistently prioritized maintaining a risk bottom line as a key principle for its financial development. As of the end of May 2025, non-performing loan (NPL) ratio in Fujian Province's banking sector stood at 1.19% , below the national banking sector average; furthermore, the proliferation of illegal fundraising activities has been robustly curbed, and Fujian stands as one of the provincial-level regions nationwide with the lowest government debt risk.
2.4 Supporting the Real Economy and Local Development
Xiamen was the first special economic zone in China to build an airport and establish an airline. In its early days, Xiamen Air faced daunting challenges, lacked even basic infrastructure like land and buildings, and had no aircraft or flight crew. Xiamen Municipal Government then established a leading team to get loans from Kuwaiti to finance the Xiamen airport's expansion, with Xi Jinping not only personally taking the helm but also engaging in multiple rounds of negotiations. Through arduous efforts, the team ultimately secured a 18-million U.S. dollars loan from the Kuwaiti government, which bridged the project's critical funding gap.
To address Xiamen Air's shortages of aircraft and professionals, Xi Jinping coordinated with the Bank of China Xiamen Branch to guarantee the lease of two aircraft from Boeing for initial operations. He also facilitated the recruitment of professional pilots and aircraft maintenance personnel from the military and thus provided essential support for the growth of Xiamen Air.
Fujian is a major province for private enterprises, and Fuyao Glass Industry Group is one of its representative private firms. In 1994, Fuyao Glass found itself in a precarious situation, facing a severe survival challenge as simultaneous investments in automotive glass production and new plant facilities led to a strained cash flow. At that time, Xi Jinping, then Secretary of the Fuzhou Municipal Party Committee, guided the local government to coordinate the company's restructuring. This involved four shareholders implementing equity swaps and improving corporate governance, which in turn created favorable conditions for attracting foreign investment and successfully resolving the company's financial crisis. From then on, Fuyao Glass embarked on a path of healthy development and gradually grew into the world's most competitive specialized supplier of automotive glass.
2.5 "Unlocking Capital Flows and Mobilizing Mountain Assets"
With a rugged terrain, where mountains cover 80% of the province, water 10%, and farmland the remaining 10%, Fujian sees forests as vital means of production and gateways to prosperity. Yet, historically, constrained by forestry's unique production cycles and the lack of innovative financial services, vast forested regions and farmers had no access to financial support. The green mountains thus became what locals call a "green bank that never opens its doors."
"Those who live near mountains make use of mountain resources." In the 1980s, Xi Jinping, as Party Secretary of Fujian's Ningde prefecture, pioneered the green development concept that "forests serve as water reserves, wealth banks, and granaries" following field research. At the time, some large- scale tree growers sought bank loans to expand operations but struggled with insufficient collateral. Xi Jinping pioneered the idea of developing "living timber loans", enabling farmers to use saplings and young trees (which would mature into valuable timber in 20-30 years) as loan collateral. This breakthrough led to the establishment of Ningde's living timber market that same year, opening financial channels for forestry development and sparking enthusiastic response among forest farmers.
To change the situation where forest farmers lived in poverty despite being surrounded by abundant forest resources, in 2002, Xi Jinping, then Governor of Fujian, initiated the reform of Fujian's forest tenure system. Without addressing property rights, the hearts of forest farmers would not be moved. Xi Jinping adopted and promoted the innovative approach of separating the management rights of forest land and the ownership of forest trees from the collective ownership of forest land, and designating them to forest farmers. He also made important instructions such as "the reform of the collective forest tenure system should move from the foot of the mountain to the top, just like the household contract responsibility system" and "the direction of the forest tenure reform is correct, and we should advance it down-to-earth to truly benefit the people". These set the course and provided clear direction for the reform.
Forestry production features significant initial investment, extended operational cycles, and slower capital returns. When designing the forestry reform plan, Xi Jinping further emphasized that after confirming property rights to households, it is essential to identify emerging conflicts and study new issues, such as "Where will the funding come from? It is crucial to consider how to bridge the channels between farmers and banks."
Two decades ago, the lack of collateral and other challenges left forestry credit virtually absent. This property rights reform not only achieved the dual goals of "securing mountain tenure, entitling trees as assets, and safeguarding livelihoods" and "greener forests with better-off farmers", but also created a breakthrough for finance to empower forestry development.
Following the path pioneered by Xi Jinping, China's forestry investment and financing reforms have continuously achieved breakthroughs. The financial potential of forest rights has been fully unleashed, catalyzing innovative instruments like forest ticket mortgage loans and forestry carbon sink loans. The vision of "unlocking capital flows and mobilizing mountain assets" has now blossomed into tangible prosperity.
2.6 Inspiration from the Development of Industrial Bank
The 1980s witnessed the birth of China's trailblazing joint-stock commercial banks, tasked with the mission of pioneering approaches to China's financial reform. Founded in August 1988 as one such pioneer, Industrial Bank faced tough fundraising hurdles in its early days. Its staff even took to the streets selling shares to secure capital.
At that time, Xi Jinping had just taken office as the secretary of the CPC Ningde Prefectural Committee. In response to the provincial government's call for all cities and prefectures to actively invest in Industrial Bank, Ningde – a region classified as "former revolutionary bases, minority-inhabited areas, border areas, islands, and poverty-stricken areas" (a classification used to denote less developed areas in China) – responded enthusiastically, allocating 3 million yuan from its tight budget to subscribe for shares. Chen Yun, the first president of Industrial Bank, recalled, "This amount was more than what even the developed cities and prefectures were contributing at the time."
Since the turn of the new century, in a bid to seize national development opportunities and bolster its risk management capabilities, Industrial Bank initiated a series of moves: raising capital and expanding its share base, renaming the company and going public, and expanding its operations nationwide beyond Fujian. In 2001, Xi Jinping, in his message for the inaugural issue of Xingye People, pointed that Industrial Bank must "take strict governance, expert management, and technology-driven development as fundamental strategies, accelerate its own growth, promote financial innovation, serve economic construction, take its deep root in Fujian, extend its branches to national economic centers, and expedite the establishment of a nationwide modern commercial bank."
Since its founding in 1988, Industrial Bank has undergone a transformational journey—evolving from a local bank to a regional bank, then a national bank, and ultimately into a listed modern integrated financial services group.
3. A Foretaste of Xi Jinping's Governance Philosophy in the Financial Sector
Finance is at the core of the modern economy, and the financial system is a fundamental institutional underpinning for economic and social development. During his tenure in Fujian, Xi Jinping demonstrated a unique ability to view finance beyond finance, grasping its essence, positioning, laws, and functions from a political and strategic perspective. These explorations embodied the consistent worldview and methodology of the Communist Party of China. They also marked the early manifestations and vivid embodiment of Xi Jinping's thinking on governance in the financial domain.
3.1 A Firm Political Stance
At the Central Financial Work Conference held in 2023, General Secretary Xi Jinping stressed that "strengthening the centralized and unified leadership of the CPC Central Committee over financial work is the fundamental guarantee for doing a good job in this field." During his tenure in Fujian, Xi Jinping consistently emphasized the Party's leadership over financial work and worked hard to enhance Party members and officials' awareness of the importance of financial affairs, ensuring that the Party's principles permeated every aspect of financial affairs.
During his tenure in Ningde, Xi Jinping wrote in his article Advocating an Economic "Grand Chorus": "For a good economic 'grand chorus', there must be a conductor," and "The Party is the core force leading our cause." Under his guidance, Party and government departments increasingly recognized the importance of financial work, giving it high priority and ensuring its effective execution. Financial regulatory bodies, banks, and other financial institutions, in turn, strengthened their support for and service to the overall economic development. These practices provide significant practical guidance for all regions and departments today on how to effectively leverage and regulate finance.
3.2 A Deep Commitment to Serving the People
During his tenure in Fujian, Xi Jinping consistently upheld the principle that "where there is a call from the people, there must be a response from the government." He advocated that officials should "serve in a post to benefit the people" and emphasized the importance of never forgetting that "the people" always precede "government." His approach to development and governance reflected a profound commitment to people-centered governance.
While serving in Ningde, Fuzhou, and at the provincial level, Xi Jinping frequently visited a marginalized population living in floating houseboats without land or shelter. Concerned with both their living conditions and long-term livelihoods, Xi stressed that helping them resettle ashore was not merely about constructing houses, but about ensuring they had a sustainable way of life, viable income, and a real sense of belonging. And it is unaccepted that their bodies move ashore while their hearts remain detached from life on land. He called for enhanced financial, fiscal, and tax support for economically underdeveloped areas and low-income populations.
From improving financial services in impoverished regions to addressing illegal private lending ("Biao Hui"), from easing financing difficulties for small and medium-sized enterprises to exploring new models of agricultural insurance, Xi Jinping consistently promoted financial policies aimed at supporting grassroots communities and strengthening weak links. It embodies the core values and development direction of "finance for the people."
Xi Jinping's actions in Fujian to prioritize the people in financial governance demonstrate that in the new era, financial work must shore up greater responsibility in supporting poverty alleviation, advancing common prosperity, improving the national governance system, and modernizing governance capabilities. And it must seek to benefit people's livelihoods and resolve their most pressing concerns, which will in turn consolidates the foundation of the Party's governance.
3.3 Strong Confidence in Chinese Culture
At the heart of the firmly established and far-reaching influence of "Chinese characteristics" lies their deep roots in the 5,000- year- old Chinese civilization. As General Secretary Xi Jinping noted during his visit to the Zhu Xi Garden in Wuyi Mountains: "Without the 5,000-year-old Chinese civilization, how could we have Chinese characteristics? And without Chinese characteristics, how could we have achieved such success on the path of socialism with Chinese characteristics?" This remark profoundly reveals the inseparable bond between China's contemporary development path and its ancient civilization, providing a vivid interpretation of the "Two Integrations" — particularly the second, i.e., integrating the basic tenets of Marxism with China's fine traditional culture.
Without the support of modern institutions, cultural heritage cannot be sustainably passed on and renewed. "Red" finance represents a seamless historical joining of traditional wisdom and revolutionary practice. Fujian, as a well-known revolutionary base area, has a deep legacy of "red" financial culture. In the former Central Soviet Area in western Fujian, the pioneers of the Communist Party of China founded the first "red" bank, the earliest "red" financial cooperatives, and the first shareholding commercial cooperative bank. These innovative practices combining the "gun" and the "purse" embodied the political orientation and people-centered nature of "red" finance under CPC leadership, offering a vivid prototype of the development of finance with Chinese characteristics.
Xi Jinping, during his tenure in Fujian, carried forward the spirit of "managing finances for the people and placing greater good and shared interest above profit." He advocated inclusive finance in the spirit of "the weak bird should fly early," pioneered the use of "living timber loans" to unlock forestry loans, used loan syndication to tackle transportation infrastructure bottlenecks, and leveraged financial tools to energize private enterprises. These initiatives integrated the traditional Chinese concept of socialist values of justice and benefit with the laws of modern market economies and carried forward the red finance philosophy of "following the Party's command and serving the people," transforming it into tangible improvements in local financial governance.
Xi Jinping's financial governance explorations in Fujian, a land imprinted with the DNA of "red" finance, continued the CPC's revolutionary-era emphasis on the importance of developing and utilizing finance. They also embodied the principles of Party leadership over finance, finance in service of the people, and safeguarding financial security, echoing the CPC's legacy of building "red" finance in western Fujian and forming a vivid illustration of financial culture with Chinese characteristics.
Chinese-style modernization is rooted in a high degree of cultural confidence. Dong Yun, a researcher at the Institute of Finance, Chinese Academy of Social Sciences, noted that China's financial modernization must remain open and inclusive, drawing on the best of global civilizations, while also maintaining firm cultural confidence and a self-reliant orientation. It must summarize China's experiences using Chinese logic, elevate those experiences into theory, and unwaveringly advance the path of financial development with Chinese characteristics.
Chapter 3: To be Continued…