Shandong may show the way in reforming China's financial sector
Will Shandong show the way for China's economy?
A former chief securities regulator and now governor of Shandong province, Guo Shuqing, has launched a range of financial experiments that observers say could become an example for Premier Li Keqiang in overhauling the nation's financial sector.
Under the reform-minded financial veteran, who was once tipped to run the country's central bank, the Shandong government has vowed that it will boost the financial services industry share of local gross domestic product from 4 per cent at the end of last year to more than 5.5 per cent by 2017.
The local government has also outlined reform plans, including setting up private banks and financial leasing firms, carrying out trials for issuing local government debt, and developing assets securitisation.
"With Guo's rich experience and outstanding achievements at the central bank, the securities regulator and the commercial bank sector, Shandong is likely to become an important testing ground for Premier Li Keqiang to launch nationwide financial reforms," said Professor Guo Tianyong, director of the banking industry research centre at the Central University of Finance and Economics in Beijing.
Experiments in setting up private banks have been slow going in the few designated areas where they are allowed on the mainland, such as in Wenzhou , partly due to authorities' reservations.
Other innovations pledged by Shandong, such as having a market for trading financial assets, land, and energy, and assets securitisation in the shipping industry have yet to be fully tested.
It has also pledged to build the capital Qingdao into an offshore financial centre to promote free trade with Japan and South Korea, and bring in more overseas investors to invest in city banks and rural lenders.
In March, the 57-year-old Guo was appointed head of Shandong, a province with a population of 94 million and almost a tenth of the mainland's economic output, after leading a range of financial reforms at the China Securities Regulatory Commission (CSRC). Some observers saw his transfer to the province as a way of grooming him for a bigger role in future.
One of his major policy achievements as CSRC chief was to attract more capital inflows by nearly quadrupling the quota for foreign institutional investors to buy A-shares. Before his stint at the CSRC, he served as a vice-governor of the central bank and chairman of China Construction Bank, one of the nation's four biggest state-owned lenders.
An official at Shandong policy office said new guidelines had been amended four times under Guo's direction to make them more market-oriented. "He has shown great decisiveness on reforms," said the official.