The long-anticipated move has finally been made. On [date], major asset management companies—China Cinda Asset Management Co., Ltd., China Orient Asset Management Co., Ltd., and China Great Wall Asset Management Co., Ltd.—announced that, in accordance with the relevant arrangements for the reform of the Party and state institutions, the Ministry of Finance plans to transfer all its shares in China Cinda, China Orient, and China Great Wall to Central Huijin Investment Ltd. through a non-compensatory transfer. Upon completion of the transfer, the Ministry of Finance will no longer hold shares in these major companies, and Central Huijin's shareholding in China Cinda, China Orient, and China Great Wall will reach [%], [.%], and [.%] respectively.

Great Reversal

Firstly, the transfer of Da from the Ministry of Finance to Central Huijin marks the completion of its phased historical mission and the beginning of a new historical task. When Da was established, it emerged from the bad asset divestiture of large state-owned banks (funded by the Ministry of Finance), with the direct goal of resolving the financial risks at that time. In other words, Da was launched with fiscal tasks. Over time, Da completed the phased historical mission assigned by its fiscal tasks, and with the development of China's economy and asset expansion, it experienced ups and downs. In today's market context, the disposal of non-performing assets is more complex, requiring higher professionalism, and the tasks undertaken are also heavier. Under the guidance of the overall reform principle of "separation of management and operation, and separation of government and enterprise," rationalizing market methods and improving efficiency has become the current choice.

Let's take a look at the official introduction of Central Huijin:

Central Huijin Investment Ltd., authorized by the State Council, conducts equity investments in key state-owned financial enterprises. It represents the state in exercising shareholder rights and fulfilling shareholder obligations within the scope of its capital contribution, aiming to preserve and increase the value of state-owned financial assets. Central Huijin Investment Ltd. does not engage in any other commercial activities and does not interfere in the daily operations of the key state-owned financial enterprises it controls.

The major transfer to Central Huijin will operate under the support of Central Huijin, implementing national policies in a more market-oriented manner. Previously, China Huarong was transferred to CITIC Group, becoming CITIC Financial Assets, taking a step ahead. For CITIC Group, the transfer of China Huarong completed CITIC's financial landscape and enhanced its market capabilities. For China Huarong, relying on the CITIC system not only improved corporate efficiency but also provided a strong support for maintaining the healthy operation of the enterprise through CITIC's management system. Now, with the major transfer to Central Huijin, there are similar benefits—it first complements Central Huijin's financial landscape and directly enhances its market capabilities. At the same time, leveraging the Central Huijin system provides new opportunities for the major to enhance corporate management.

Previously, foreign rating agencies have continuously downgraded the ratings of major entities, largely based on two reasons: first, they believe that the operational efficiency is not high; second, they consider that national policies do not provide sufficient support for these major entities. Now, Central Huijin will support major entities in conducting in-depth market-oriented reforms to improve management and enhance quality and efficiency. Central Huijin, being a "national team" with a strong background, implements national policies through financial support. Therefore, the collaboration between Central Huijin and major entities represents a simultaneous strengthening of both market and policy execution capabilities. Compared to the previous stance of foreign rating agencies, the fundamental aspects of major entities have undergone a significant directional reversal. Of course, the true reversal still depends on the enterprises' own operational achievements.

It is worth mentioning that, as the Chinese economy is undergoing a major cyclical adjustment, the nationwide counter-cyclical regulation is more manifested as "relief" and "support." Many projects are in the investment phase, and their benefits and returns are not immediately visible. The national benefits will only be fully realized when the project industries emerge from their cyclical difficulties. This is similar to the case of Central Huijin. Statistics show that by the first half of the year, since its establishment, Central Huijin has cumulatively invested trillions of yuan and earned trillions of yuan, representing a cumulative increase of approximately times.

More professional

The large-scale transfer to Central Huijin has led various analyses to unanimously mention a term: return to core business. This analysis is quite apt. In reality, after the major state-owned banks had largely completed the disposal of non-performing assets, they utilized their financial advantages during a period of asset expansion to engage in many activities outside their core business, which also caused some issues. On a certain date, the National Financial Regulatory Administration issued the "Administrative Measures for Non-performing Asset Business of Financial Asset Management Companies." The introduction of these "Administrative Measures" preceded the large-scale transfer to Central Huijin, or in other words, before the further marketization of the major banks, it essentially drew a boundary for them in advance. It is akin to Tang Sanzang's journey to the West to fetch scriptures, where Sun Wukong is needed to subdue demons along the way, but first, Sun Wukong must be fitted with a golden headband and Tang Sanzang must be given the spell to control it.

As of [specific date], the institutions in which Central Huijin Investment Ltd. holds controlling stakes or shares are as follows: National Development Bank, Industrial and Commercial Bank of China Limited, Agricultural Bank of China Limited, Bank of China Limited, China Construction Bank Corporation, China Everbright Group Company Limited, China Export & Credit Insurance Corporation, China Reinsurance (Group) Corporation, China Jianyin Investment Limited, China Galaxy Financial Holdings Co., Ltd., Shenwan Hongyuan Group Co., Ltd., New China Life Insurance Company Ltd., China International Capital Corporation Limited, Zhonghui Life Insurance Co., Ltd., Hengfeng Bank Co., Ltd., Hunan Bank Co., Ltd., CITIC Securities Co., Ltd., China Galaxy Asset Management Co., Ltd., and Guotai Junan Investment Management Co., Ltd.

Facing different key financial enterprises, the functions of Central Huijin can be summarized into several aspects: equity investment, asset management, market operations, risk management, and policy implementation.

The realization of the functions of Central Huijin will impose clear professional requirements on enterprises that undertake different functions, which is also conducive to the enhancement of the broader professional domain. On the same day as the major transfer to Central Huijin, China Securities Finance Corporation Limited also announced that the company's shareholders intend to transfer their % equity stake in the company to Central Huijin. Data shows that the shareholding ratios of the major shareholders of China Securities Finance are as follows: Shenzhen Stock Exchange .%; Shanghai Stock Exchange .%; China Securities Depository and Clearing Corporation Limited .%; Shanghai Futures Exchange .%; China Financial Futures Exchange Co., Ltd. .%.

In other words, China Securities Finance has been separated from the stock exchange context, and whether it is refinancing or re-lending, it has been taken over by Central Huijin, which also takes into account risk management, policy implementation, and professionalism. Many people see the large transfer to Central Huijin and speculate that it is "brewing something big." In fact, national professionalism and quality improvement and efficiency enhancement are themselves "big things." Today, the disposal of non-performing assets has huge potential for China's economy. And the strengthening of Central Huijin is also a major issue on the table, which means that the state has a stronger ability to regulate the financial market. A strong financial sector in China, isn't that a big enough deal?