Financial Regulation & Control And Cross-over Development Of Economy In Xizang

Xizang (Tibet) has observed the following weak points: weak economic base,lack of supporting industries, irrational economic structure, scattered productionfactors, inadequate growth of market, shortage of qualified personages, backwardinfrastructures, high economic and social operation cost, extremely unbalancedregional development and huge gap between the urban and rural development. Theurban residential disposable income of Xizang is currently above the national meanstandard, but most of such income is sourced from the income of workers and staffs'wages depending on the finance allocation of the Central Government and theindependent "blood-forming" function is rather poor. Meanwhile, in the vastagricultural and pastoral areas, the industrial structure is unitary, the capacity ofresisting natural disasters is weak and the farmers and herdsmen have limited incomesources. Currently, the problems for sufficiency of food and clothing have not yetbeen resolved for many of the masses in the agricultural and pastoral areas.It is impossible to achieve the objective of building up a well-off society only byrelying on the current conventional development model but by carrying out across-over development based on sticking to the approaches of advancing with thetimes and giving the priority to innovation in concepts, system and technology. For itscross-over development, Xizang must start with the regional difference (unbalance) inits economic, technical and social conditions and with the reality that most of theareas observe a weak economic base is weak, difficulty for development and urgencyfor development. Following the principle of the unbalanced development law,absolute interests and relative interests of regional economy, priority to efficiency andtaking into account the fairness, it should adopt the development strategy of "keybreakthrough, systematic harmony, structural optimization, orderly and gradualdevelopment and overall development".Achieving the cross-over development in Xizang depends on the investment,while the investment relies on the development of capital market in Xizang and thedevelopment of Xizang's capital market relies on raising Xizang's capacity of capitalformation. For this, Xizang is required to establish solidly the concept of walking with"two legs": on the one hand, it should actively strive for investment from the centralgovernment;on the other hand, it should absorb energetically the social investment. Inother words, according to the financing status and financial innovation in differentdevelopment stages of Xizang, it should adopt the relevant countermeasures andtactics suitable for the development strategy of the local capital market. Finance is theblood for Xizang's economy.Since its liberation, Xizang Region has established a series of socialist financialsystems, which have energetically promoted the economic development in Xizang.Since 1994, Xizang has observed unprecedented opportunities for development andhas achieved a rapid economic development. However, it is a systematic engineeringfor Xizang's economy to turn from the rapid development to the cross-overdevelopment and it requires for a sustained capacity of mobilizing the resources.Xizang's independent capacity for capital formation is inadequate and conflicts withthe development demand. Without being fundamentally resolved, this problem willimpact greatly on the anticipated achievement for Xizang's cross-over development.Therefore, for promoting Xizang from the rapid development to the cross-overdevelopment, it is critical to give a play to the supporting role of financial regulationand control, initiating the social investment, make a better and adequate use of thefinancial support policy, promote the cultivation of capital market in Xizang, raise itscapacity for capital formation and enhance the interaction between the capital marketand Xizang's realization of cross-over development. By stressing on and actuating thenon-governmental funds, inspiring the social investment, carrying out the financialsupport and cultivating, developing and improving the capital market in the region ofXizang, it will not only lead to the active economic benefits in resolving the partialcapital for Xizang's cross-over development and bringing about the development ofXizang's economy for the sustained rapid economic growth as well as the activesocial benefits in Xizang, but it will also create extremely active social benefits;it willnot provide convenience and space for different domestic and foreign investors toinvest in Xizang, but it will also become the power for promoting Xizang's expansionand opening, deepened reform, adjustment of structure and accelerated development.Three financial factors are impacting on the role of social investment in Xizang:(1) Capital support system: the role of capital market depends on the externaleconomic environment for the capital operation on the one hand and on theimprovement of the capital support system on the other hand;The two influence andconstrain mutually with each other and directly impact the strength and efficiency ofcapital support. A recall on the development history of Xizang's monetary and creditpolicies is extremely important for analyzing the financial investment. Inimplementing the preferential credit loan policy, Xizang has basically experienced thestages of interest-free, slight interest, differential interest rate and rebate of interestdifference, which are actually an adjustment process for the monetary and creditpolicy focused and based on the low interest rate. During the period from 1951 whenXizang was liberated in a peaceful way to 1959 when the democratic reform started,the interest-free loan policy had been implemented. During the period from 1959when the democratic reform started to 1978 when the reform started, theslight-interest and low-interest loan policy had been implemented. During the periodfrom 1978 when the reform started to 2005, the preferential interest rate policy hasbeen implemented. (2) External economic environment: in view of the externaleconomic environment for capital operation, there are many other unfavorable factorsaffecting the role of capital in Xizang: (a) low economic development level, (b) rougheconomic growth mode, irrational industrial pattern and work division, which are themain factors constraining the capital market and (c) constraining factors for thesystem innovation. (3) Capital market system: (a) inadequate capital formation, whichis the main reason responsible for backward economy in Xizang, (b) lack of effectivemarket-based financial policy system and improved diverted financial supportinginstitutional system and (c) weak financing capacity of capital market and therelatively delayed growth of capital market in Xizang.Particular measures and proposals for actively cultivating and improvingXizang's capital market: (1) Make active and adequate use of Xizang's preferentialfinancial policy: firstly, establish the policy bank;secondly, promote the financialproduct innovation;thirdly promote the policy innovation;fourthly, strengthen theinnovation in financial regulations;fifthly promote the innovation in qualified humanresources. (2) Actively explore and cultivate the capital market: firstly, push forwardthe development the stock exchange in Xizang;secondly develop the bond exchange;thirdly, improve the modes and mechanism for financial investment;fourthly, developthe fund market and bring about the investment demands;fifthly continue to expandthe foreign invest and make a good use of the domestic and foreign resources. (3)Give a full play to the role of non-governmental capital: firstly, allocate part of thecurrent budget or raise funds from other channels to provide a proportion ofinvestment subsidies to the foreign or external enterprises to establish business,develop resources in Xizang, which comply with certain conditions;secondly, reduceor exempt part of the investment tax;thirdly reduce the taxation on enterprises interms of production and operation;thirdly, establish the mechanism for encouragingthe residents to invest. (4) Establish and improve further the organizational structureof financial institutions in Xizang: firstly, explore and establish "Xizang DevelopmentBank";secondly support the central government to establish "Western DevelopmentBank" and set up its branches in Xizang so as to centralize the allocation of theinvestment for medium and long-term construction projects and help-the-poordevelopment funds provided by the central government;thirdly, introduce suchjoint-stock commercial banks and foreign banks as Minsheng, Everbright andDevelopment Bank for even more financial support;(5) Strengthen further theguidance on the social capital and improve practically the "soft" environment forinvestment.