BEIJING, Jan. 7 (Xinhua) -- China's financial policy makers concluded a two-day national financial work conference on Saturday, elaborating the country's financial philosophy and outlining the sector's policy priorities in the coming five years.
"China's economy has maintained stable and relatively fast growth with stabilized consumer prices and improvements in people's lives. The financial system is running steadily. The good momentum of economic and social development remains unchanged," Premier Wen Jiabao said at the meeting.
For the future, the financial industry must serve the real economy, improve real economy's access to finance and prevent overspeculation and virtual bubbles from inflating the economy, Wen noted.
Supervision over the financial sector must be strengthened to prevent systemic risk, Wen said, calling for the banking institutions to establish a more complete and prudent risk monitoring regime.
The equity markets should also enhance regulation to better protect investors' legal rights and interests, he said.
As for the local government financing vehicles (LGFVs), the premier noted that local government debts are "generally safe and controllable", in an attempt to dispel worries over possible insolvency of local governments.
Wen said the revenues and spendings through the LGFVs will be included in the government's budget management while a mechanism will be established to control the gross local government debts through a risk-warning arrangement.
The premier reiterated that China's financial system is running on a stable course despite the global financial crisis.
"We have the confidence, capabilities and conditions to move our economic growth to a new stage," he said.
China has resolutely pushed forward a series of financial reforms which have set significant historical milestones. Large commercial banks have remarkably improved their capabilities of guarding against risks, Wen said.
"We should especially note that the global financial crisis has not yet ended. We should strengthen our awareness of risks and responsibilities in order to push financial work to new levels," he said.
Wen voiced his support for the development of financial innovation, but stressed that this should not avert supervision or escape the real economy. "Risk-aversion should be the lifeline of our financial work," he said.
China will further open up its financial sector to the outside world in an "independent, gradual, safe and win-win" way to ensure the country's economic and financial security, Wen said.
He pledged more support from the financial sector for the country to restructure its economy, save energy and reduce emissions, protect the environment and encourage indigenous innovation, while allowing market forces a greater say in deciding fund allocation and to more clearly define the government's role.
Credit priorities will be given to the country's key infrastructure projects under construction, the affordable housing projects as well as small- and micro-sized enterprises that meet the state industrial policies, according to the premier.
Calling a series of financial reforms completed in the past years as "historical milestones," Wen said China's large commercial banks have remarkably improved their capabilities of guarding against risks.
According to a statement released after the meeting, China's assets in the financial industry totaled 119 trillion yuan (18.8 trillion U.S. dollars) at the end of November 2011, a 149-percent increase from that at the end of 2006.
As of the end of September 2011, the banking capital adequacy ratio stood at 12.3 percent, 5 percentage points higher than that at the end of 2006, while the non-performing loan ratio was 0.9 percent, 6.2 percentage points lower than the end of 2006.
Currently, China has signed bilateral currency swap agreements worth more than 1.3 trillion yuan with 14 countries or regions, with 2.6 trillion yuan of cross-border trade being settled in yuan.
Wen reiterated a prudent monetary policy for this year and make it more targeted, flexible and forward-looking by maintaining a "reasonable growth" in social financing.
Xia Bin, a monetary policy advisor to China's central bank, the People's Bank of China, said the prudent monetary policy means the government can no longer stimulate the economy with expansionary measures.
"Slowing growth is worldwide," Xia said. "It is not an issue concerning economic cycles, but a natural result of the restructuring of the global economy and the Chinese economy."
Held every five years, similar financial work meetings to map out overall development blueprints for the financial sector had been convened by China's central authorities in 1997, 2002 and 2007.