A debut of the term ‘financial powerhouse’ in China’s new five-year plan will push the financial system to the front lines of industrial transformation
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China’s 15th Five-Year Plan is not just another five-year roadmap, but instead represents a critical starting point toward achieving basic modernization by 2035. Against a backdrop of rising geopolitical tensions, intensifying technology competition and a slowing domestic economy, policy priorities are shifting from stabilizing growth to reshaping the development model. Stock markets in Shanghai, Shenzhen and Hong Kong have all rebounded over the last year, with authorities repeatedly signaling support for market stability. Investors, however, are increasingly focused on what role the financial system will play in the latest transition.
China’s “Recommendations for the 15th Five-Year Plan,” released late last year, included the goal of building a “financial powerhouse” for the first time. The document also called for increasing the share of direct financing, strengthening the multi-tier capital market system, and developing technology and digital finance. This echoes President Xi Jinping’s repeated calls for finance to serve the real economy and avoid drifting away from productive activities, signaling a shift from a system characterized by short-term policy adjustments toward a broader restructuring of the financial system itself.
In fact, “financial support for the real economy” is nothing new in China. It has been repeatedly stressed since the Central Financial Work Conference in 2017, mainly through tools such as reserve requirement cuts, relending programs and targeted credit to stabilize growth and contain risks. Yet the overall financial structure has never undergone a fundamental change.
Tian Xuan, vice dean of Tsinghua University’s PBC School of Finance, noted that as of June 2025, direct financing accounted for only about 31.1% of China’s total social financing, while bank assets still represented more than 90% of the financial system’s total assets. In some regions, the market-based fundraising share of government-guided funds is even below 20%.
In his view, this shows that China remains a highly credit-driven financial system, with limited capacity for markets to truly bear risk and price innovation.
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