From Scale Expansion to Quality Enhancement: China's Financial Industry Delivers High-Quality Report Card During the 14th Five-Year Plan Period

The “14th Five-Year Plan” period is a critical five years for China’s financial industry to shift from scale expansion to quality improvement, moving steadily from a major financial power toward a strong financial nation. During these five years, various financial institutions have adhered to serving the real economy as their core mission, enhanced market competitiveness through reforms, focused on the “five major financial articles” to optimize service directions, and built solid risk prevention lines amid strict regulation, delivering impressive development results.

By the end of 2025, China’s total banking and insurance industry assets have exceeded 520 trillion yuan, maintaining its position as the world’s largest credit market and second-largest insurance market; the total market value of A-shares has surpassed 100 trillion yuan for the first time, with the technology sector’s market share continuously increasing.

Guotai Haitong Financial Team reports that the banking, insurance, and securities industries need to align with their respective roles, clarify pathways, and promote the implementation of the “14th Five-Year Plan” financial goals to achieve coordinated growth in scale and quality.

Reforming to Strengthen Risk Management and Resilience

Risk prevention remains an eternal theme in finance, with the proper handling of risks associated with small and medium-sized financial institutions, especially high-risk ones, being of utmost importance.

In recent years, through deepening central-local cooperation, key regions in China have developed reform-based risk mitigation plans tailored to local conditions, employing methods such as mergers and reorganizations, online repairs, and market exits in a coordinated and effective manner, achieving notable results.

According to the Financial Regulatory Administration, in asset disposal, the “14th Five-Year Plan” period saw an over 40% increase compared to the “13th Five-Year Plan,” with the number of high-risk small and medium-sized banks significantly reduced from peak levels, and some provinces achieving “dynamic zero” for high-risk small institutions.

Taking rural credit cooperatives as an example, various regions have explored models such as unified legal entities and joint banks, with a number of new “trillion-yuan banks” emerging. Other well-known models include “upper-level participation,” “lower-level participation,” and the establishment of city-level unified legal entities or core institutions separated from provincial credit union systems.

Larger-scale reorganizations have also occurred within village and township banks. During the “14th Five-Year Plan” period, 410 village and township banks exited the market through dissolution, mergers, or cancellations, with major initiating banks increasing holdings, transferring shares of rural banks across regions, and cases of “village reform to branches” or “village reform to divisions” frequently reported.

In this process, regulators actively explored multi-channel capital replenishment mechanisms, supporting local government special bonds for small and medium-sized bank development, and a new round of fiscal injections into state-owned banks has been gradually implemented, playing a key role in capital strengthening and risk mitigation for commercial banks.

Many local governments and state-owned enterprises have also increased their holdings in local small and medium-sized banks through capital injections or share transfers, with state-owned shareholding continuously expanding. The increased proportion of state-owned shares also helps optimize ownership structures and enhance risk resistance.

In September 2025, Li Yunze, Director of the Financial Regulatory Administration, stated at a press conference that the total capital and provisions for risk resistance in the banking and insurance industries exceeded 50 trillion yuan, providing a more solid, resilient, and confident foundation to face various challenges.

Implementation of the “Five Major Financial Articles”

During the “14th Five-Year Plan” period, the deepening of supply-side structural reforms in finance has advanced significantly. This policy was first proposed officially in February 2019 and is regarded as an important pathway to promote high-quality financial development and enhance financial services for the real economy.

Data shows that over the past five years, the banking and insurance sectors have provided an additional 170 trillion yuan in funds to the real economy through credit, bonds, equity, and other channels; the combined financing via stock and bond markets reached 57.5 trillion yuan, with the proportion of direct financing steadily increasing. During this period, financial institutions actively integrated the “five major financial articles” into their strategic development, with credit resources increasingly directed toward major national strategies, key sectors, and weak links, gradually optimizing credit structures while slowing down single-scale expansion.

By the end of 2025, loans related to the “five major financial articles” totaled 108.8 trillion yuan, accounting for nearly 40% of all loans, with a growth rate 6.6 percentage points higher than the average growth of all loans. This fully demonstrates that the “five major financial articles” have become a core financial force supporting high-quality development.

Among them, the first of the “five major financial articles,” technology finance, has developed rapidly under policy support, with loans to tech-based small and medium-sized enterprises maintaining over 20% growth for five consecutive years. Three joint-stock commercial banks’ financial asset investment companies (AICs) have been established and launched their first projects, continuously expanding the financial ecosystem supporting technological innovation.

Peng Lifeng, Director of the Credit Market Department of the People’s Bank of China, stated in a keynote speech in December 2025 that from the perspective of financial institutions, doing well in the “five major financial articles” is an important part of deepening supply-side structural reforms, with broad market and development potential in related fields.

“Bring In, Go Out” – Dual-Channel Efforts

High-level financial opening is an essential path to accelerate the construction of a strong financial nation. During the “14th Five-Year Plan” period, China has steadily promoted the “bringing in” and “going out” of financial institutions, entering a new stage of opening-up.

With the full removal of restrictions on foreign shareholding ratios, channels for international capital to enter China’s financial markets have significantly expanded. Statistics show that during the “14th Five-Year Plan,” the China Securities Regulatory Commission approved 14 new foreign-controlled securities, fund, and futures institutions to operate in China. In banking, DBS Bank has invested and increased holdings in Shenzhen Rural Commercial Bank three times, now holding 19.4% of its shares; Daxin Bank established the country’s first “dual-license” bank in Shenzhen; five foreign-controlled joint venture wealth management companies have been launched…

Currently, 43 of the top 50 global banks have established branches in China, and half of the largest 40 insurance companies have entered the Chinese market. About 80% of national banks have introduced foreign strategic investors, improving corporate governance and management efficiency.

Li Yunze stated at the 2025 Lujiazui Forum that foreign institutions are important bridges and links for attracting capital, talent, and technology. The advantages of Chinese and foreign institutions complement each other, fostering competition and cooperation, enriching the types of institutions and products, and better meeting diverse financial needs.

On the “going out” front, in response to the wave of overseas expansion, Chinese financial institutions are taking larger steps toward internationalization. Hong Kong and Macau are preferred locations for overseas deployment. In recent years, many securities firms have increased capital in their Hong Kong subsidiaries or established Hong Kong holding platforms to tap into new growth points through international business.

Additionally, WeBank’s technology subsidiary and Dongguan Bank’s Hong Kong branch were inaugurated in 2025. China Merchants Bank has also announced plans to accelerate its “four modernization” transformation centered on internationalization. According to a securities reporter, some joint-stock banks have emphasized in internal meetings that all lines should focus on expanding international business.

The People’s Bank of China’s work conference earlier this year also highlighted the need to promote improvements in cross-border financial services. At the recent Capital Market “14th Five-Year Plan” foreign-invested institutions symposium organized by the China Securities Regulatory Commission, participating institutions offered specific suggestions on promoting industry “bringing in” and “going out,” supporting differentiated development of foreign institutions, and enhancing domestic institutions’ global resource allocation capabilities.