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CSC Chairman Wang Guangyu Attends Global Shared Finance Spring Summit

Global Shared Finance 100 Persons Shenzhen Spring Summit was held in Shenzhen on March 31st 2016. The summit theme includes risk prevention and development opportunities in shared finance, and opportunites and challenges in blockchain. CSC Chairman – Mr. Wang Guangyu delivered an address on behalf of the China Academy of New Supply-Side Economics. He expressed that, global shared finance is in the early developmental stage and needs the hard work and collaboration from different sectors of society, in order to build a new world of shared finance ecosystem.

Speech below:

New Supply actively promotes the reform-centric new supply-side economics research, and provides theoretical explanations and advisory to China’s reforms. Since last year, we have been promoting the professional platform development for shared finance and pension finance. There are two main points to the speech.

First, shared finance is young and fearless, it needs to be explored from different aspects, and requires a lot of care. The current shared finance can be compared with the internet back in 1995, which attracted a lot of attention but lacks common practice and understanding. It has mixed reviews worldwide. An article in the media said that most startups do not have good foundations, are not run well, burned billions of capital; and so few of them remain profitable. JP Morgan research shows that many just want to experience these platforms for the short term instead of build it into a sustainable source of revenue. As the frontier platform, we should examine the theoretical mechanism and system building more instead of superficial calling and praise.

The five elements of shared finance are: idle resources, access rights, connectivity, information, and liquidity; at the core is optimal allocation. Take an odd phenomenon in the Chinese economy as example: on one hand, monetary supply is very sufficient, yet many startups and SMEs face funding restraints, implying a disconnect in capital supply and demand, and a mismatch of financial resources. Whether shared finance can achieve a breakthrough in this dilemma, and realize the fair and efficient allocation of financial resources is worth our thoughts and efforts.

Second, shared finance implementation needs more self-discipline and regulation, with the emphasis on investor education. We should learn lessons from internet finance, which has had many problems exposed beyond market and credit risks. Industry regulation and risk control are imminent issues to solve, capital regulations need to be strengthened, in order to prevent issues such as illegal fundraising and misappropriation of funds. We should not let the industry be tainted and laid to waste by these issues.

Shared finance is an industry that can serve the greater good, and all industry players have the responsibility to educate our investors, and help people learn and grow while making investments. When investors lack investment experiences or even the most fundamental financial knowledge, bad investments will tend to blow up. The industry should strongly support big data, cloud computing, block chain, information security and other IT R&D, in order to enhance the supply power of financial resources, and ultimately provide the public with simple and credible financial tools, so people can directly participate and mutually benefit, realizing the real value of shared finance and eradicating malpractices in the current financial system.

In conclusion, technological breakthrough and fair competition will drive the development of shared finance; adequate and appropriate regulations and investor education will safeguard the standardization of internet finance. Hope we will work together in taking the shared finance ecosystem to a whole new level of development.