Wenzhong Fan: The Core for High-Quality Financial Development Must Transfer “Quantitative Expansion” to “Qualitative Enhancement” | Insights

Release time：2025-10-15    

At the crucial period when Chinese economy is stepping towards high-quality development, fostering new-quality productive forces has become pivotal to overcoming existing challenges. As the central nexus of the modern economy, the financial sector is undergoing a profound transition from scale expansion to enhanced quality and efficiency. As General Secretary Xi Jinping announced, fostering new-quality productive forces is the intrinsic requirement and key focus point for promoting high-quality development. How can digital-intelligent technology reshape the financial ecosystem and ignite growth engines in this context? Dr. Wenzhong Fan, Distinguished Professor of Practice at FISF and Deputy Director of Beijing Academy of Social Sciences, made an in-depth interpretation for us, unveiling the core logic and practical paths of financial reforms.

Wenzhong Fan, Distinguished Professor of Practice at FISF, Deputy Director of Beijing Academy of Social Sciences (with the rank of a full bureau-level official), Standing Council Member of the Chinese Financial Society, Standing Committee Member of the 12^th National Committee of the All-China Youth Federation, and Deputy Director of the Economic Committee, 14^th Beijing Municipal Committee of the CPPCC. Former Chairman of Beijing Financial Holdings Group, Former Director of the International Department of the China Banking and Insurance Regulatory Commission and Deputy Director of both the Chongqing State-owned Assets Supervision and Administration Commission (SASAC) and the Chongqing Municipal Development and Reform Commission.

Digital innovation in factors of production

“To understand how digital-intelligent technology promotes high-quality financial development, it is imperative to first situate their historical inevitability within the evolutionary framework of productivity theory.” Wenzhong Fan mentioned that land, labor and capital are the three fundamental factors of production in classic economic theory. As we enter the information age, knowledge and technology have become increasingly significant.

In the digital economic era, data has acted as the core factor driving the transition of productivity. At the 4^th Plenary Session of the 19^th CPC Central Committee held in 2019, “data” was announced to be the fifth factor of production for the first time, marking China’s understanding of economic laws in the digital era has reached new heights.

At the same time, Artificial Intelligence, big model technology in particular, has been growing rapidly, endowing machines with unprecedented capabilities in perception, cognition, and decision-making. Just as stated by Karl Marx, the instrument of labour is the measuring instrument of the development of labour power. AI-powered productive instruments are replacing or augmenting human labor in cognitively-intensively domains, serving as a new engine propelling the transformation of productive forces.

Efficiency transformation of financial development

Ever since the reform and opening-up policy, the financial industry in China has achieved great-leap forward development. However, its development mode mostly relied on scale expansion and quantitative growth. With the Chinese economy stepping into the stage of high-quality development, such an asset scale-oriented model is no longer viable.

Wenzhong Fan believed that at the macro level, continued reliance on debt-driven growth will accumulate systemic risks; from the perspective of resource allocation efficiency, traditional finance exhibits shortcomings in serving key areas such as small and micro enterprises as well as technological innovation; and in terms of international competition, the accelerated digitization of global finance poses a risk of diminishing competitiveness for China if it fails to transform and upgrade.

Therefore, he proposed that the core for high-quality financial development must transfer from “quantitative expansion” to “qualitative enhancement”, i.e. transforming from the extensive growth pursuing asset scales to the connotative development aiming to increase the efficiency of social capital allocation. Accordingly, capital shall be guided towards market subjects with greater innovation capabilities, higher efficiency and better prospects, to boost total factor productivity, advance the upgrading and optimization of the economic structure, and ultimately deliver benefits to people at large.

Dual-wheel drive of digital-intelligent empowerment

According to Wenzhong Fan, to achieve a substantial improvement in capital allocation efficiency, it is essential to rely on digital-intelligent technology to systematically reshape the financial system, which shall be primarily manifested in two key directions: enhancing transparency and advancing intelligence.

Firstly, enhance the transparency of the financial system with big data technology. Traditional risk control relies heavily on collateral, guarantees, and historical credit records, making it difficult to conduct a comprehensive assessment of borrowers. This approach particularly tends to exclude small and micro enterprises as well as individual business operators. On the other hand, big data technology can construct a holistic profile by integrating multi-source data such as tax records, electricity consumption, logistics information, and transaction histories, which can reflect operational conditions and credit risks more accurately. Such “soft information” analyses based on behavioral data breaks through traditional limitations and enables financial institutions to identify overlooked yet promising clients, while also facilitating real-time monitoring and dynamic risk warning, thereby enhancing systemic stability.

Secondly, raise the intelligence level of financial services with AI technologies. The AI big model has powerful natural language processing and logical reasoning capabilities and can deal with a huge number of non-structural data and simulate expert decisions, increasing service efficiency and quality to a large extent.

More importantly, AI can continue learning and optimizing itself, thus a positive circulation of “data-model-decision-feedback” can be formed, making the financial system more adaptive and forward-looking. Such AI-driven innovation is now busting out the restrictions of the traditional service mode and giving rise to whole-new financial formats.

Path to building a global foothold

In face of historical opportunities, Wenzhong Fan suggested that China’s financial industry should firmly follow the development path driven by innovation and prioritized by quality. With the world’s largest internet user base, the most dynamic digital market, the richest application scenarios and strong policy support, China has unique advantages for developing digital-intelligent finance.

To build a global foothold of digital-intelligent finance, Fan came up with the following measures that need to be implemented systematically: First, strengthen top-level design and strategic planning: incorporate digital-intelligent finance into the national financial development strategy, formulate medium- and long-term plans, establish and improve trans-department coordination mechanisms, and form policy synergy. Second, reinforce digital infrastructure: accelerate the construction of new infrastructure like 6G and AI computing centers, push forward the opening and sharing of public data, break down data silos and release data value. Third, strengthen research and development to achieve breakthroughs in core technologies: increase R&D investments in AI, blockchain, privacy-preserving computing and other frontier technologies, encourage deep integration among industry, academia, research, and application, and foster hi-tech enterprises with global influence. Fourth, perfect supervision framework and governance system: establish new mechanisms including “regulatory sandboxes” and penetrative regulation to seek balance between innovation and risks. Strengthen legislation on data security, privacy protection and algorithmic ethics to uphold market fairness and safeguard consumer rights. Fifth, cultivate and open a collaborative ecosystem: inspire financial institutions to carry out strategic cooperation with hi-tech companies and universities to form a collaborative innovation network, and to actively participate in global financial governance and standard formulation with the purpose of enhancing China’s voice and influence in the international financial system.

Source: Financial News client-side reporter: Lu Wang             Edited by: Nengjing Liu

The article is reprinted from the official WeChat account of Financial News