The Chinese CPPCC held its “Systematic Financial Risk Prevention System" conference on May 15^thin Beijing.Professor JIN Li, a member of the CPPCC and Associate Dean of Peking University’s Guanghua School of Management, addressed the need to “guide capital flows to core high-tech industries” and provided three suggestions on “creating a long-term mechanism to mitigating financial and real economic risks."

With the resolution of systemic financial risks, the government is discouraging investment through real estate speculation and discouraging other specific kinds of investment. If investment funds are directed poorly, they can have detrimental effects on the bond market, stock markets, foreign exchange markets, credit markets, and other financial markets, causing other asset prices to fluctuate significantly. Only by finding large-scale, long-term and sustainable investment opportunities for the general public’s wealth will it be possible to gradually resolve systemic financial risks.

Meanwhile, the outbreak of the ZTE incident revealed the intention of developed countries to restrain the technological advancement of China. The current state of our core high-tech industry has become a bottleneck limiting China's high-quality economic development and may also bring systemic risks to the real economy and financial sector in the future. If we can transform the public's support into long-term investment in core high-tech fields, we can simultaneously resolve both financial and physical risks by connecting the long-term interests of thousands of families with the country's interests.

Core high-tech fields are a major source of power for any country, and the development of these fields can neither solely rely on the market nor on the administrative system. As a socialist country, China should utilize the competitive advantages of its system and be self-reliant in promoting technological development. However, it is also necessary for policymakers, businesses, users, and markets to coordinate closely with each other to rationalize both short-term and long-term interests and jointly create a harmonious and self-perpetuating ecological system. By all means, Chinese tech firms should use the domestic market and user data to improve products rather than losing out to foreign products.

Aiming to target the concerns stated above, Professor JIN proposes three suggestions. First, issue long-term special bonds that support advanced technology and support national investments.If 1% of China’s private wealth could be used to support core high-tech fields, the capital available will significantly surpass the government’s budget for annual technological spending. Secondly, the government should shift away from using a purely market-oriented approach to making investments and instead guide funds to core high-tech businesses. Thirdly, enterprises that produce or conduct research on core technologies and enterprises that develop applications for these core technologies should support each other through mutual shareholding arrangements. For eligible core technologies, preferential tax policies and subsidies shall be provided by the government to strengthen the enthusiasm for “innovators” and “early adopter” users of the domestic technology.