At the Fifth National Financial Work Conference in Beijing on July 14-15, President Xi Jinping emphasized three major financial tasks: making the financial sector better serve the real economy, preventing financial risks and deepening financial reforms.

Xi's emphasis on the financial tasks makes it even more important for China to deepen supply-side structural reform, which in turn can help reduce financial risks.

First, the development of the real estate sector and the real economy is far from harmonious. The major source of revenue for many local governments is the sale of land-use rights, and many local authorities regard "building houses" as the main mode of urbanization, which have resulted in an overheated real estate sector. And people's rising purchasing power due to high leverage has worsened this problem.