China is in a strong position to ward off systemic risks to maintain financial security, and must do so now.
Financial security is part and parcel of national security, and concerns the wealth of ordinary people. This is why President Xi Jinping last week called for increased efforts to safeguard financial security.
A complicated and tricky economic and financial situation has made the task crucial and urgent.
Internationally, a number of major economies are adjusting their monetary and fiscal policies, creating spillover effects that could create shocks for China's financial system and endanger financial stability.
Domestically, the ongoing economic transformation has reached a critical point where the financial sector, which is tasked with propping up the upgrading of the real economy, may suffer temporary pains.
In the Chinese financial sector, non-performing debt, which is rising at a slower pace, may continue increasing, the shadow banking sector is too big and regulatory arbitrage is rising.
High leverage ratios, excessive impulses to make profit and insufficient regulation are all daunting challenges.
However, China's financial risks are generally under control and the economy is equipped with a solid tool kit to neutralize such threats.
First of all, the Chinese economy is stabilizing and growing at a relatively fast pace, which has created room for regulators to intervene.
The country's financial system is also backed up by the world's largest banking sector with assets of 232 trillion yuan (33.68 trillion U.S. dollars), a massive stock market valued of 52 trillion yuan, a huge fund industry worth 18 trillion yuan, and a strong insurance sector with assets of 16 trillion yuan.
China's convincing performance during previous regional and global financial crises testifies to the resilience of its financial sector, with the country acquiring experience in fighting risk.
The key lies in financial institutions taking care of their own balance sheets and keeping self-disciplined amid stricter regulation.
Chinese regulators are already in action.
The central bank has adopted a macro-prudential assessment: a formal evaluation that assigns a score to each bank based on parameters such as asset quality, capital adequacy, proportion of liquid assets and funding stability, in its battle to curb risk.
In recent months, the banking regulator issued 10 documents in seven days to rein in bank risk. The securities regulator harshly punished a number of listed firms for illegal acts, and the insurance regulator has taken 39 measures to keep risk in the sector under control.
The 1997 Asian financial crisis and the 2008 international financial crisis remained a warning that we cannot afford to stand by and take financial risk lightly.