In 2007,against the backdrop of complex global economic and financial situations,uncertainties increased evidently.Starting with the U. S.sub-prime mortgage crisis in March，financial institutions bankrupted one after another,and governments took rescue measures to inject liquidity into the market.Accordingly,the U.S.dollar witnessed a continued depreciation against other major currencies,prices of primary products such as oil,gold and agricultural products rose sharply,which gave rise to global inflationary pressures.In 2007,the 17th National Congress of the CPC was successfully convened. In respouse to the complex international economic and financial situations,the CPC central committee and the State Council strengthened overall arrangements in macro-adjustment and the national economy grew at a rapid pace with optimized economic structure,enhanced efficiency and improved people＇s well-being.In 2007,GDP stood at 24. 66 trillion yuan,up 11.4 percent year-on-year.Grain production increased for four consecutive years,the added-value of statistically large enterprises rose by 18.5 percent,and total imports and exports grew by 23.5 percent on a year-on-year basis. The per capita disposable income of urban and rural residents increased by 12.2 percent and 9.5 percent in real terms respectively,an acceleration of 1.8 percentage points and 2.1 percentage points over 2006.Against the backdrop of continued good growth momentummy,financial macro management achieved significant results,of the national econo-financial reform underwent important advances,financial market innovations increased,financial seances steadily improved,and international cooperation and communications further deepened.Financial macro management achieved evident effects Against persistent pressures of excess liquidity caused by the BOP imbalances,the PBC flexibly adopted a variety of monetary policy instruments to strengthen liquidity management,and maintain money and credit aggregates at an appropriate level.In 2007,the People＇s Bank of China(PBC) raised the reserve requirement ratios for RMB on ten occasions and one occasion for foreign currencies，intensified the sterilization by issuing special treasury bonds,and hiked the RMB benchmark deposit and lending rates successively on six occasions.Meanwhile,the role of credit policy was strengthened in economic restructuring,guiding financial institutions to limit lending to enterprises with high energy consumption,heavy pollution,or excess production capacity as well as intensifying credit support to weak sectors and vulnerable groups in the economy. Efforts were also made to encourage the rural credit cooperatives(RCCs) to increase credit extensions to the agricultural sector,with the majority of the central bank lending quota directing to the western area as well as the grain-producing regions，and the RCCs can enjoy a preferential reserve requirement ratio.Real estate credit policy was improved so as to prevent credit risks in the real estate sector. Thanks to the effect of various macro-management policies,from 2003 to 2007,with nearly 40 percent of the annual growth of foreign exchange reserves and above 10 percent economic growth,the broad money M2 increasing by 17 percent year-on-year in 2007.The ratio of M2 to GDP was stable at 1.6，ending the rising trend. The excessively rapid growth of money and credit was eased and credit structure was further improved,contributing to a sound and rapid economic development.Financial reform was further promoted The Shanghai Interbank Offered Rate(SHIBOR) was officially launched. The reform of RMB exchange rate formation mechanism was further deepened.On May 21,the band of the RMB trading price against the U.S dollar in the interbank spot foreign exchange market was enlarged from 0.3 percent to 0.5 percent. Efforts were made to advance the reform of financial institutions. The Industrial and Commercial Bank of China Ltd(ICBC),Bank of China Ltd(BOC),China Construction Bank Corporation(CCB),and the Bank of Communications Ltd(BOCOM),after the completion of share-holding reform,continued to deepen internal reform to strengthen risk management and internal control mechanism,and to speed up the transformation of the growth mode. CCB and the BOCOM were listed on the Shanghai Stock Exchange on May 15 and September 25,2007 respectively. The ground-laying work for the reform of the Agricultural Bank of China achieved positive effects. The commercialization reform of the China Development Bank(CDB)made significant strides. China Life and China Ping An were successfully listed in the A-share market,and the reform of China Reinsurance(Group)Corporation was steadily pushed forward. The reform of RCCs achieved fresh progress,with the historical burdens preliminarily reduced and the policy of "Money for Mechanisms" started to take effects. The reform of the insurance sector achieved new progress,with China Life and China Ping An offering A-share stocks and China Pacific Insurance Group(CPIG) successfully listed in the A-share market. The share-holding reform of the entire China Reinsurance(Group) Corporation was completed.Product innovation and institutional building of the financial market was strengthened Continued efforts have been made to promote the development of asset-backed securities and the establishment of pilot fund management companies by commercial banks.The forward interest rate agreement and RMB/foreign currency swap were introduced,which further diversified the risk management tools available in the financial market. The business of Shanghai Gold Exchange was innovated. Institutional and infrastructure building in the financial market was pushed ahead. The National Association of Financial Market Institutional Investors was established to exercise self-disciplined management in the interbank market and shift government functions. The CDB,the Exim Bank and the BOC issued a total of 10 billion yuan of RMB bonds in Hong Kong.The institutional building and product innovation in the capital market was carried forward at a steady pace. The introduction of QFII and QDII allowed domestic and foreign investors to invest in capital market both at home and abroad through legitimate channels though RMB was inconvertible under the capital account and the capital market was not opened. Corporate bonds were issued and traded in stock exchanges,signaling the start of corporate bond issuance in China and providing a new refinance channel for listed companies. The building of growth enterprise market made headways. The non-tradable share reform was broadly accomplished with the market size steadily expanding. As of end-2007，there were 1550 listed companies with the combined capitalization of Shanghai and Shenzhen stock markets of 32.71 trillion yuan,among which 9.31 trillion yuan were traded in the secondary market, and 92 million valid securities accounts were opened by investors. In 2007,a total of 772.8 billion yuan was raised in the domestic securities market. The turnover of the futures market totaled 728 million lots or 41 trillion yuan in 2007,hitting a record high.Insurance business developed rapidly,and the insurance market maintained a good growth momentum with improved structure and efficiency,and developed in a coordinated manner.The surging stock market boosted the development of investment-linked insurance and universal life insurance,contributing to rapid growth of life insurance business. As of the end of 2007,there were 110 insurance institutions in China,with their total assets reaching 2.9 trillion yuan,up 36.9 percent from the beginning of the year,and their premium income reaching 703.58 billion yuan,growth of 25 percent year on year. The outstanding invested insurance funds amounted to 2.7 trillion yuan,whose return reached a historical high of 279.17 billion yuan,exceeding the total returns of the past five years. In 2007,the fiscal authority for the first time provided subsidies to agricultural insurance in a pilot program of five crops in six provinces,which greatly promoted the development of agricultural insurance. Meanwhile,live pig and breeding sow insurance yielded good results under the guidance of the State Council.Financial service was further improved The Real Right Law of the People＇s Republic of China that came into force on October 1,2007 clearly stipulated relevant rules on real rights for security,and greatly improved the secured transactions system reform in China. The China National Advanced Payment System(CNAPS)and the check image exchange system were used across the country,and the on-line verification system for citizent＇s identity was completed and put into operation. Checks were cashable nationwide.Improvements were also made in the payment environment in rural areas,management of currency issuance,and state treasury service system. Credit information management was further streamlined,as evidenced by well-established nationwide and centralized credit information databases for enterprises and individuals,and expanded coverage of information collection. The account receivable pledged registration system was launched. The building of credit information system for SMEs and rural sector made new breakthroughs. Since the end of 2006,steps have been taken to appropriately improve banking institutions＇ access to rural areas according to the principle of lowering threshold but strengthening supervision,and such new-type rural financial institutions as village and township banks,loan companies and rural credit shops were set up on a pilot basis in 6 provinces and autonomous regions including Sichuan,Inner Mongolia,Gansu,Qinghai,Jinlin and Hubei,which played a preliminary role in introducing social funds into rural areas to support rural economic development. In October,the pilot program was expanded to cover 31 provinces,autonomous regions and municipalities.The antimoney laundering system took shape,as evidenced by China＇s membership in the Financial Action Task Force(FATF) and the gradual extension of the anti-money laundering work to the whole financial sector.International cooperation made new progress China made active efforts to join international organizations and dialogue mechanisms,get involved in international economis and financial policy coordination and rules making,strengthen the communication and cooperation with international organizations,countries and regions,and vigorously cope with the pressures on China＇s macroeconomic policies and the appreciation of the RMB in particular to defend national interests. The ability of managing an international portfolio of foreign exchange investment was further enhanced,and the practice of using RMB as a currency for international trade payment and settlement was facilitated. Funds clearing and settlement services were provided to commercial banks in Hong Kong and Macao that conduct RMB business.In 2007,reform and development highlights of China＇s financial industry were accompanied with concerns and bewilderment. Almanac of China＇s Finance and Banking presents an overall picture of China＇s financial industry in a comprehensive,objective,accurate and scientific manner supported by hard facts and figures. Hope it will help readers to understand China＇s financial development.
