| In the context of ever-deepening market-oriented reform, the advancement of policy-based banks is vital to deepen financial reform due to their large scale assets. Since the establishment of China Development Bank, Agricultural Development Bank of China and The Export-Import Bank of China, they have gone through more than twenty years. Through issuing various kinds of loans, they have supported national large scale infrastructure and economy housing project, promoted agriculture and rural area development, and boosted foreign trade. Meanwhile, because of the change in the overall market economy, policy-based banks are facing transition of tasks and operation conditions accordingly. Under the guidance of policy-based banks, more and more commercial banks are willing to getting involved in several policy-oriented businesses, which can gradually lead to a commercial competition tendency. Thus the competitive relationships between policy-based banks and commercial banks are becoming increasingly profound. For instance, loans on the infrastructure construction project are supported by China Development Bank. According to policy-based implementation of loan term, the loan term could reach a length of ten to twenty years. For the purpose of profit-seeking, the loan term of commercial banks would be two to three years. If China Development Bank also engages in short term projects, the engagement will overlap with the business of commercial banks, and thus produces competition. In particular, since the financing costs of commercial banks is much higher than those of policy-based banks, commercial banks will lose advantage in the competition with policy-based banks in the same domain. Besides, how to reform is also a major issue that haunts policy-based banks and even impedes their development. In 2007, China Development Bank launched commercialization reform, while they also undertook a large amount of policy-based business at the same time. The Export-Import Bank of China sticks to the positioning of policy-based banks, but it has not solved the issue on scope definition and size limit of self-operated business in the past few years. Agricultural Development Bank of China remains uncertain about the reforming strategies, its business is definitely constrained.On April 12 th 2015, Chinese Government Network released three documents: Official Reply of the State Council on Approving the Plan for Deepening the Reform of the China Development Bank, Official Reply of the State Council on Approving the Plan for Deepening the Reform of Agricultural Development Bank of China, and Official Reply of the State Council on Approving the Plan for Deepening the Reform of The Export-Import Bank of China. The official reply has positioned China Development Bank as development-based financial institute, which ended its commercialization reform. This means China Development Bank returned to the status of policy bank. The official reply also put forward that Agricultural Development Bank of China should give priority to policy-based business, while The Export-Import Bank of China should strengthen the positioning of policy-oriented function. The scheme of the official reply established the basic framework and strategy of reform and operation in China policy-based banks, which would enable domestic policy-based financial system to play a better role. However, official replies concerned only demonstrated the overall direction of policy bank operation, the blanks of related legislation regarding policy bank still need to be bridged. And critical points in the reform, namely, positioning of institutes, division between policy business and commercial business, capital constraint index, are beginning to come out. On the basis of above issues, this paper is going to study the legal system of policy-based banks from the perspective of reform access for policy-based banks, to structure the legal system for domestic policy-based banks in view of related system from overseas policy-based banks, to define internal operation legal system of policy-based banks, and to design external system environment so as to support policy-based banks to give full play.There are five chapters in this paper, main contents of each chapter are as follow:Chapter One studies the realistic starting point of legal system of policy-based banks, that is, the reforming progress of policy-based banks. Three policy-based banks in China all have their own developing routes. China Development Bank once carried out drastic commercialization reform in 2007. After years’ practice, it found out that this route seemed to be hard to continue since it hadn’t solved problems in bond credit issued by China Development Bank. It is far from a definite conclusion that whether policy-based banks should transform to commercial banks, though it was claimed that the reform focused on commercialization. As a result, supervision institution had to regulate it as one special institute. While in fact, this strategy didn’t target at setting particular regulation index for China Development Bank. The reform of China Development Bank has undergone a progress from commercialization transformation to development finance positioning. Agricultural Development Bank of China was facing lack of government supportive strength at that time. In order to obtain capital source, Agricultural Development Bank of China put emphasis on developing commercial credit, which finally led to marginalization of policy-based credit business, and badly affected its policy function. In terms of operational businesses, the Export-Import Bank of China had overlapping areas with the other two policy-based banks. Similar to Agricultural Development Bank of China, the Export-Import Bank of China also lacked low-cost working capital. The characteristics presented in the reform or reforming discovery of policy-based banks were that they operated from “breaking even with slight profits” to “pursuing benefits”. In terms of capital source, with emphasis on issuing bonds, they expand policy-based business scope as well as run commercial businesses. Analyzing from the comparative perspective, the reform of foreign policy-based banks didn’t fundamentally deny policy finance, but aimed to enhance operating efficiency of policy finance, strictly obeyed the principle of “Lawmaking Should Go First” at the same time. For the latest progress in policy-based banks’ reform in China, denying commercialization reform and carrying out market operation are the correct routes. Development finance was merely put forward by the idea of enhancing operating efficiency in policy-based banks. Market operation emphasized in this theory was just a means in policy finance operation. It couldn’t detach itself from the category of policy finance. We have met abundant problems in the reform, the root cause is that the reform is unreasonable according to the law.Chapter Two discusses legislation idea reconstruction in the reform of policy-based banks. The reform of policy-based banks should be conducted in the framework of law. Reform and rule of law are the two major themes in current Chinese society. The Third Plenary Session of the 18 th Central Committee of the CPC established the developing goal of “deepening the reform in an all-round way”, and put forward promoting “the rule of law and building a rule-of-law republic comprehensively”. In recent years’ speeches, President Xi Jinping has repeatedly stressed the significant relation between reform and rule of law. He proposed the principle of “major reforms should have solid legal ground”, and “Reforms must be promoted on the basis of the rule of law”. Policy-based banks’ reform should establish reform scheme based on the thought of rule of law, reform the process on the way of rule of law, and consolidate reform achievements through the practice of rule of law. Policy bank legislation should be supported by economics theory. The emergence and advancement of policy-based banks is based on Government intervention theory. Meanwhile, financial restraint theory and Quasi-public goods theory also offer further demonstration. Policy bank legislation must ensure that it can bring its function into play. The Complementary function to remedy the market failure and the directing function to actively guide the market is the specialty to differentiate from other commercial financial institutions.One of the legislation positioning of policy-based banks is that it locates between the government and the market. It boasts economic monitoring functions authorized by laws. Meanwhile, it has to exercise certain legal control on the action of government intervention power, so as to prevent government behavior replacing policy-based banks’ autonomous behavior. The policy bank is one of the means in national macro-control, thus policy bank law should belong to the category of Economic Law, Macro-Control Law and Financial Regulation Law. The legislation should conform to public interest standard theory, ensure to achieve sustainable development of the society while pursuing social overall benefits.Policy bank legislation should not only possess self-consistency of its own logic, but also center on policy-based banks, and focus on the relation cohesion between the subject and the external related subject. As one of the financial regulation means conducted by the government, policy-based banks are extremely associated with the government. As the strong supporter of policy-based banks, the government also supervises and administers them. Policy-based banks serve for government economic policies and social policy service. They act as the tool for government economic development and intervention economic activities on macro-control level. The government provides policy-based banks with financial support, while policy-based banks autonomously run business under the guide of government industry policies and accept supervision from it at the same time. The Central Bank offers professional directions and financing support for policy-based banks. In China, the Central Bank also approves bond issuing of policy-based banks. The relationship between policy-based banks and commercial banks is featured by complementary advantages. Meanwhile, since commercial banks have mature distribution of branches and settlement network which can deputize policy loan businesses.Chapter Three is the introduction part of legal system of policy-based banks. Firstly, it hackles current related systems of policy-based banks. We can find that the basic norm of the three largest policy-based banks’ subject and their behaviors are mainly from normative documents like Determinations and Notice released by State Council and internal regulation in the three largest banks. There are some other normative documents which were supposed to target at commercial banks, also require policy-based banks to obey and execute. The stipulation that policy-based banks obey are widely scattered through administrative laws, several regulations and normative documents released by State Council. These norms lack systematicness and determinacy. As the product and special subject of socialist market economy, business activities of policy-based banks must be brought into legal system. According to legislative research conditions in China and the urgency of legislation, we can establish unified policy bank laws at the very beginning, then formulate administrative laws applicable to different banks. In the process of legislation, we should give consideration to both regularity and flexibility, reality and perspectiveness. In policy bank laws, we should pinpoint the legal status of policy-based banks——public welfare legal entity. Its identification has been in an uncertain condition for a long time, hovering between policy bank and commercial bank, especially after the commercialization reform of China Development Bank in 2007. Although features of development finance have demonstrated, it should be clarified that it still belongs to policy bank in essence since it carried out some applicable market operation methods when running businesses.The fundamental principle of policy bank law should include policy principle, public principle, security principle, independent management and moderate intervention principle, and the principle of not competing with commercial banks forwardly. Policy-based banks aim to maintain legal rights of policy-based banks and their creditors, standardize the behavior of policy-based banks, improve asset quality, prevent financial risks and promote national economy and ensure a sound development for policy-based banks by the financial support of policy-based banks. Chapter Four constructs internal operating legal system of policy-based banks in China. In order to conduct standardized operation, policy-based banks should make clear the setting of the organ of authority. At Present, among all the policy-based banks, China Development Bank and The Export-Import Bank of China have established board of directors, but both lack specific stipulation on internal operation. While Agricultural Development Bank of China hasn’t established modern company management structure. Information concerned from the official website and annual report can’t show the presence of the board of directors. It looks more like administration from the angle of structure. The Ministry of Finance could perform investor’s duty, make decision on investment and execute investment. In this case, the board of directors can make decisions independently, and accept supervision from board of supervisors. The construction thinking of the board of directors can refer to those of state-owned enterprises in noncompetitive fields. Typically, they have government directors, independent directors and inside directors. The authority and obligation of the board of directors need to be clarified through law. Meanwhile, we can establish incentive and restrictive mechanism, reduce agency cost, so as to promote the board of directors to perform their duties better.Policy-based banks carry out characteristic management and they are mutually complementary with commercial banks. Besides, three policy-based banks all have their own business scope. How to differentiate between policy business and commercial business is an issue not only exists in China, but also hooks heated debate in the rest of the world. To some degree, the phenomenon that policy-based banks run commercial business at a sideline has its necessity. For example, through performing guiding functions, they run commercial business as a sideline after attracting commercial banks to enter immature markets. In addition, policy-based banks own subjective impulse to run commercial business because of imperfect auxiliary system in the aspect of capital supplement and evaluation. Proportional limits should be set when running commercial business. We should make clear the business scope, employ separate accounting management. In the final path, policy-based banks should quit from commercial business decisively at the mature time.In order to ensure sustainable development of policy-based banks, capital and risk management system have to be perfected. The index of capital adequacy ratio which is applicable to policy-based banks should be defined, and long-acting mechanism of substantial capital should be established. The government ought to increase finance capital regularly or irregularly based on actual application. policy-based banks shall be allowed to withdraw accumulation fund in accordance with annual surplus and enjoy after-tax preference by tax arrangement. Additionally, risk management in credit business must be strengthened, systematic risk management mechanism must be formed, and risk loss compensationmust be institutionalized.Chapter Five discusses the follow-up of external system environment of the reform of policy-based banks. We should establish financial supervision mechanism that is applicable to policy-based banks. The respective supervisory function of the Banking Regulatory Commission, People’s Bank of China and the Ministry of Finance should be explicit. In terms of institution supervision, the establishment, alteration and termination of corporate bodies in policy-based banks are vital items which have to be approved by the State Council. The Chairman of the Board, the government director and the supervisor are appointed and removed by the State Council directly. The qualification examination and continuous supervision of important personnel, and other senior executives can be nominated by the board of directors, then checked by or prepared for examination from the Banking Regulatory Commission. As to business supervision, we need to adopt prudent regulation principle. To prevent internal operation staff from employing separate accounting, and calculating defective business into policy business, we need to supervise separate accounting. As the amount of bond issue of policy-based banks increases, stricter standards ought to be revised. Also, performance evaluation mechanism should be applicable to policy-based banks, serves for the business type and aims of policy-based banks. The evaluation may mainly focuses on social effect, takes financial effects into consideration to some degree.The country should provide policy-based banks with finance and tax support, including the establishment of diverse and stable capital raising mechanism, and well-timed capital supplement. According to the Statutory Taxation Principle, we must have legislation to grant tax preference to policy-based banks, and change those policies as the adjustment of business scope. If policy-based banks run commercial business at the same time, they wouldn’t have the rights to enjoy tax preference any more, unless the benefits they get from the sideline can be invested into the capital for the policy business operation.In the case of titular investor, being restricted to evaluation index, the board of directors and senior executives may risk making profits or abuse power to seek profits for themselves. Therefore, it is necessary to ensure that policy-based banks conduct reform smoothly by establishing a rigorous legal liability system. Moreover, since policy-based banks might face much intervention and management from the local government due to their properties. On the other hand, as independent juridical person, the policy bank should shoulder independent responsibility within judicial purview while enjoying power. |
PDF Full Text Request