By Zheng Xingchen, Research Institute of Finance, DRC

Research Report, No.104, 2018 (Total 5379) 2018-6-29

Abstract: Promoting the high-quality development of security industry is significant for the transformation and upgrading of China’s economy. The high-quality development of security industry should include reducing the level of asymmetric information, strengthening the foundation of credit, equalizing responsibilities and rights and controlling the scale of high-risk products. In view of the experience and lessons drawn from the international financial market, the high-quality development of the security industry should bear the following features: 1. The efficiency of resource allocation is high. In addition, the commercialization of financial organizations should register a sustainable development, financial products should carry investment value and the financing channels of the real economy need to be smooth. 2. Risk management is effective. The regulation should be consistent with the market innovation and the legal security mechanism should be full-fledged. 3. The pricing mechanism of assets is sound. 4. The market organizing system is well organized. 5. The mechanism of cross-industry coordination is adequate. In this regard, three policy options are put forward as follows. First, the authorities should strengthen market risk management and risk monitoring, separate risk transfer channels from others and improve the capital buffer capability of financial organizations. Second, the security industry should improve its capability to serve the real economy. Relevant sectors should enforce the rights and responsibilities of investors, the investment behaviors and capabilities to counter risks as well as risks and profits in lockstep with each other, propelling the authorities’ regulation abilities to be in line with the market innovation. Third, regulation reform should be pushed ahead in the security industry. Dynamic and transparent monitoring should be implemented through new technologies and professional teams to achieve initial and timely early-warning and intervention.

Key words: security industry, high-quality development, connotations, features, policy options