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Shanghai Finance Forum

January 14, 2017

SHANG HAI, Jan. 14, 2017— The Shanghai Finance Forum (SFF) today gathered together leading economists and finance experts from around the world to discuss about the major challenges and opportunities as China continues to develop its economy and capital markets.

“A well-functioning financial system is essential for sustainable economic growth and development – a world-class capital market is necessary for China to execute global economic leadership,” said Nobel Laureate Robert Merton in his keynote speech titled “On the Role of Financial Science and Finance Innovation in Development of the Chinese Capital Market”.

Financial innovation drives improvement of the financial system, and finance science, technology, and economic need drive financial innovation, he added.

China should create a “North Star to Nirvana”, suggested Merton, also a Distinguished Professor of Finance at Massachusetts Institute of Technology, on a design process for development and implementation of large-scale financial? innovation projects in China.

Dr. Raghuram Rajan, former governor of Indian Reserve Bank, said that the populist insurrections in the West, driven by concerns about job prospects and stagnant incomes, could pose short-term risks for monetary policy, banking in Europe, geopolitics and China’s growth.

“Emerging markets have to focus more on domestic demand and capital flows will remain volatile, Rajan said in his speech on “The Global Economic and Monetary Outlook: How Will Populist Insurrections in the West Affect the Emerging World”.

Alleged job losses are more due to automation than trade, according to Rajan, a Distinguished Service Professor of Finance at the University of Chicago and the Chief Economist and Director of Research at the International Monetary Fund from 2003 to 2006.

Dr. Min Zhu, who retired from the role of Deputy Managing Director of IMF in 2016, said that he expects the world economy to be characterized by low growth, low inflation, low interest rate and low investment this year, as the world undertakes structural changes in demography, demands and income distribution.

China has scored some initial achievements in economic structure adjustments, though challenges still lie ahead, said Zhu, who is now President of the National Institute of Financial Research.

“Both China and the world need structural reforms to boost productivity and economic growth,” he noted in his speech on the global economy and China.

The SFF, bringing together about 350 leading scholars, policy makers and practitioners, was hosted by Shanghai Jiao Tong University Shanghai Advanced Institute of Finance (SAIF) to exchange ideas on the major challenges and opportunities as China continues to develop its economy and capital markets..

Jiang Wang, Mizuho Financial Group Professor at the Sloan School of Management, said that China's switch from a scale-oriented and government-led growth pattern to an efficiency-focused and market-oriented one will inherently require a greater degree of openness in the financial system.

"The key of this reform is to truly let the financial market play the decisive role in allocating resources and risk management, and this role must be supported by a modern, open financial system," said Wang, who is also Chair of the Academic Advisory Council of SAIF, the SFF organizer.

As a member of the financial community of Shanghai and China, SAIF is committed to training top talent, building an open platform for research, and becoming a leading think tank, especially on issues related to China’s financial system, said Chun Chang, Executive Dean of SAIF.

“SFF aims not just to identify the issues but also to explore possible solutions through rigorous research, in-depth discourse and intimate interaction, “Chang added.

Besides the keynote speeches, two panel discussion sessions were held on China’s capital market and GDP growth, respectively. The panelists included Shangjin Wei, Professor of Finance and Economics, Columbia University; Tao Guan, a senior research fellow of China Finance 40 Forum and former director of the balance of payments department of the State Administration of Foreign Exchange, Jun Qian; Professor of Finance, SAIF and Associate Director of China Academy of Financial Research (CAFR), Qiuping Qu, President of Haitong Securities Co., Ltd and Xiaodong Liu, CEO of Sailing Capital Management Co., Ltd.