wu xiaoling : stepping up the study of the housing financing system and promoting the healthy development of housing finance in china speech by ms wu xiaoling, deputy governor of the people ’ s bank of china, at the international seminar on the housing financing system, beijing, 25 april 2006. * * * ladies and gentleman, good morning. i am happy to join you in such a warm spring season to discuss housing financing issues and provide explore policy options for development of housing financing system in china. here, on behalf of the people ’ s bank of china, i would like to express my warmest welcome and sincere appreciation to your presence at this important gathering. the seminar was part of the cooperation program between the pbc and the world bank to conduct a joint research on strategic issues concerning china ’ s housing finance. i hope through this seminar, we could learn from the successful experiences of other countries to design the framework and development targets of china ’ s housing financing system from a strategic point of view. here, i would like to stress three points. i. great attention should be paid to issues of real estate and real estate financing. maintaining price stability and promoting economic growth are the main policy targets of almost every central bank in the world. after 1980 ’ s, large fluctuations in the real estate market have drawn high attention of governments and central banks around the world. first, the real estate industry plays an important role in an economy and interacts with the commodity, service and factor markets as a pillar industry ; therefore it can significantly pull the growth of the gdp. the real estate industry has direct and indirect relations with some 57 industries according to estimation, and in 2001, contribution of the real estate industry to the gdp growth is around 1. 9 to 2. 5 percentage points. in 2005, investment in real estate development reached rmb1575. 9 billion yuan in china, accounting for 17. 78 percent of the total fixed assets investment and 8. 6 percent of the gdp. in the chinese economic transition, continued urbanization process and housing monetization will promote the development of real estate industry, so the real estate industry will be one of the important pillar industries for a long period of time in future. second, housing is related to people ’ s lives. a suitable house provides the basic living protection and a comfortable living environment that improves living quality, so housing policy and real estate industry development policy are important components of a moderately wealthy society and relevant to the realization of social development targets. according to

cpc central committee and state council, take effective measures to further support the pilot programs of financial reform and opening - up in shanghai. first, to facilitate the rmb internationalization, we will support shanghai in innovating and carrying out pilot programs in cross - border rmb business and products following the market - driven principle. we will give full play to the rmb in pricing and settlement of commodities. besides, shanghai can tap its advantages as an international financial center to provide financing support for the belt and road initiative. second, in the context of promoting rmb capital account convertibility, we will support shanghai in the pilot reforms of foreign exchange management, increasing the functions of free trade accounts in the shanghai pilot free trade zone, and promoting convenience in capital account management and convertibility of capital account. third, we will support shanghai ’ s efforts to further improve the financial market and financial services. as an international financial center, shanghai has 1 / 2 bis central bankers'speeches been playing an important role in various financial markets, including the stock, bond, money and foreign exchange markets. we will make more efforts in infrastructure development to expand the scope and depth of market, make trading more convenient and efficient, improve the legal framework, market environment, custody and settlement of transactions, in an effort to increase the appeal of the financial markets in shanghai and promote its status as an international financial center and a hub of financial markets. moreover, shanghai has huge potential in development of financial services, given its advantage as a talent pool, its appeals to foreignfunded institutions in payment and settlement businesses including third - party payment, bank card services and rating businesses, and vast space for business development. fourth, going forward, the financial sector opening will follow the principle of national treatment to gradually lift caps on foreign ownership and limits on business licenses. given shanghai ’ s unique competitive advantages, many foreign banks, securities companies, insurance companies, and investment banks have chosen shanghai as a focal point in their plans for global business development. therefore, shanghai will be the highlight of both china and the world in the development of financial institutions. the fifth is that shanghai also has considerable potential and advantages in leading the development of financial technologies. financial institutions and relevant companies in shanghai are forerunners in the country in r & d and innovation of financial technologies and we expect they will continue to do so in the future. shanghai ’ s development as an international financial center calls for concerted efforts of all parties. the pbc will continue to support