out in the four state - owned asset management companies to enable them to operate on real commercial basis with hard budget constraints. fourth, when the market has not been fully developed, it is desirable to let the institutions with rich market experiences to make price evaluation so as to avoid soft constraints and set up internal incentives. fifth, efforts should be made to establish proper incentives. without incentives or with very weak incentives, it is not possible to preserve and enhance the value of the assets and make maximum recovery. without effective incentives, people may also tend to seek personal gains from the disposal of assets. sixth, it is important to have appropriate procedures and prevent any improper practices so that the assets are disposed through market competition. however, if the market is not strong enough – for example, market participants are under soft constraints or there are adverse internal incentives, improper behaviors may arise even with sound procedures, and the procedures themselves may become a shelter disguising those improper activities. seventh, it is crucial to develop market intermediaries, since the disposal of assets relies importantly on the integrity and services of the intermediaries. eighth, the objectives of setting up asset management companies are not only to dispose the nonperforming assets in a professional way, but also to make the commercial banks stronger so that they will be able to provide better financial services. so the government needs to consider how to handle the relationship between the asset management companies and the commercial banks. the asset management companies will not operate satisfactorily and there will be much criticism from the public if the above are not handled properly. the state council attaches great importance to the issues concerning the asset management companies. premier wen jiabao has said that “ the asset management companies have had five years ’ experiences in disposing the non - performing assets, and it is time for them to carefully review the experiences and lessons and try to resolve the long - term problems ”. apart from promoting more effective internal management of the asset management companies and strengthening external regulation and supervision on them, the government has much more to do. from the longer - term point of view, china will need a well - functioning capital market to enable its economy to develop soundly.

issue, and the financial stability and development committee ( fsdc ) of the state council has made special arrangements that require active, prudent and orderly progress achieved in a step - bystep manner. the overarching plan adopts a two - pronged approach. on the one hand, 2 / 4 bis central bankers'speeches focusing on the existing business rules by unifying the standards for old - age finance products and removing products which do not live up to their names. on the other hand, carrying out pilot programs of business innovation and vigorously developing professional old - age products that can provide actual elderly care, such as old - age deposits, old - age wealth management and funds, dedicated old - age insurance, commercial pensions, etc. we will select out financial institutions and franchised institutions which have more favorable conditions to participate in the endeavors first, firmly bear in mind china ’ s realities, learn the experiences, both positive and negative, of other countries, and blaze a trail for the reform and development of old - age finance. iii. we will unswervingly push forward the opening - up of the financial service sector opening - up and cooperation are the only way to financial prosperity and development. in an enclosed environment, it is impossible to foster financial institutions or markets which are competitive in a real sense. promoting reform and development with opening - up is an important lesson learned from our experience in the past 40 - plus years of reform and opening - up. in his key remarks delivered at the celebration of the 40th anniversary of the establishment of the shenzhen special economic zone, general secretary xi jinping made a profound point that the new development pattern was not an enclosed domestic cycle, but an open, dual - cycle pattern with both domestic and international cycles. similarly, it is amid the twists and turns in an open environment that china ’ s financial system has become more international and resilient and achieved today ’ s historic achievements. china has established and developed the world ’ s largest credit market, and the world ’ s second largest stock market, bond market and insurance market. large state - owned commercial banks are leading the world or even outperforming global peers in productivity, management costs, inclusive finance, digitized operations, etc. large insurance companies are also in the front ranks of the world in terms of growth rate, development potential and market valuation. since the 19th cpc national congress, under the strong leadership of the cpc central committee and the direct guidance of the fsdc