Two people chat outside the headquarters of the China Banking and Insurance Regulatory Commission on April 8. Photo: IC

The guidance issued by the China Banking and Insurance Regulatory Commission (CBIRC) on promoting the high-quality development of the banking and insurance industries will curb the ratio of household debt, improve the household debt structure and serve the real economy, analysts told the Global Times on Sunday.

China should improve the structure of investors by promoting effective conversion of household savings into long-term funds in the capital market through multiple channels, including enterprise annuities, occupational annuities and various health and pension businesses, according to the guidance released on Friday.

Guo Xiaobei, a research fellow with China Minsheng Bank, said that the guidance will diversify the investment channels for residents and decrease the saving rate, which will increase the source of capital to serve the real economy.

"The guideline shows that the regulator supports the introduction of pension savings and investment into household finance. China will support the real economy by turning household savings and wealth into long-term investment products," Guo told the Global Times on Sunday.

"The insurance industry needs to get back to its function of providing insurance - protecting people against possible bad things that might happen in the future - instead of focusing on becoming an asset manager," Hu Qimu, a senior fellow at the Sinosteel Economic Research Institute, told the Global Times.

Analysts said that the guidance is conducive to the sound development of the housing market.

As noted in the guidance, China will strictly enforce regulations on real estate finance to curb the excessive growth of the household debt ratio and promote its healthy and stable development.

Nearly 60 percent of China's household debt is tied up in housing loans, posing serious structural problems, according to a report by the Survey and Research Center on China Household Finance published in October 2019.

"The emphasis should be placed on curbing excessive growth of household debt, which means the government will have control over housing loans," Yan Yuejin, research director at the E-house China R&D Institute, told the Global Times on Sunday.

Industry insiders said the guidance also showed that China will further open up its financial sector and actively promote the development of foreign-funded banks and insurance institutions, in line with the Foreign Investment Law, which took effect on Wednesday.

China will relax market access conditions and enlarge the business scope of foreign banks and insurance institutions, and it will treat all domestic and foreign subjects fairly. The country will allow offshore asset management institutions to set up foreign-controlled wealth management companies in the form of joint ventures with subsidiaries of Chinese banks or insurance companies, according to the CBIRC.

Newspaper headline: Nation aims to curb household debt ratio, serving real economy