Financial leasing is a bridge connecting finance and the real economy, and over more than 30 years of development in China it has experienced many ups and downs. After commercial banks entered this field in 2007, financial leasing developed rapidly and its strength was continuously enhanced. The attention of national leaders has made the industry even more confident about its development.

    On December 27, 2013, Premier Li Keqiang visited ICBC Leasing in Tianjin Binhai New Area for inspection and research. After hearing an introduction to business development from ICBC Leasing President Cong Lin, Li Keqiang said that the financial leasing industry is a new highland in China, with a short history of business development, still insufficient experience, an inadequate talent pool, and imperfect supporting policies. He encouraged financial institutions to venture forward and experiment, to carve out new worlds of their own, to be the first to eat crabs—and to eat "emperor crabs" at that, while also being able to steer the "emperor crabs" around the world. He stressed that the reform of financial leasing is a successful financial innovation by banking financial institutions centered on the real economy. Financial leasing should provide strong financial support for real-economy enterprises and for large Chinese equipment manufacturers going global.

    Recently, Vice Premier Wang Yang of the State Council also made instructions on a financial leasing development report submitted by the Ministry of Commerce, stating that the financial leasing industry has great prospects and requiring the Ministry of Commerce to actively cooperate with relevant departments to support the development of financial leasing.

    In 2013, the scale of the financial leasing sector expanded rapidly, reaching a pace of more than one new company per day on average. By the end of 2013, the number of financial leasing companies reached 1,026, an increase of 466 from 560 at the beginning of the year. This was due to greater awareness of financial leasing among all parties and the continuous improvement of the financial leasing environment. This environmental improvement was fully reflected in the pilot process of the "business tax-to-VAT" reform in China.

    Due to the special nature of the industry, in the early stage of the "business tax-to-VAT" pilot, changes in tax policy increased the tax burden on financial leasing enterprises. In response to calls from within and outside the industry, the fiscal and tax authorities readily accepted advice and promptly revised the "business tax-to-VAT" policies concerning financial leasing, clearing obstacles for its development.

    At the same time, the legal environment for financial leasing is also expected to improve. In 2009, the Financial and Economic Affairs Committee of the National People's Congress entrusted the Supreme People's Court to resolve legal issues in the financial leasing industry through judicial interpretation. Starting in 2010, the Supreme People's Court extensively solicited opinions from courts at all levels and from the financial leasing industry, and on that basis finalized the judicial interpretation, which will be issued in the near future. It is understood that the judicial interpretation mainly covers issues the industry has long cared about, including the determination and validity of financial leasing contracts, contract performance and publicity of leased property, contract termination, liability for breach of contract, and statutes of limitations.

    At the end of 2013, the China Banking Regulatory Commission issued the "Measures for the Administration of Financial Leasing Companies (Draft for Comments)," lowering the threshold for entry into financial leasing. The Measures will further promote the healthy development of financial leasing companies, guide capital of various ownership types into the financial leasing industry, and further advance the pilot process for commercial banks to establish financial leasing companies. More financial leasing companies will be born in 2014. It is worth noting that among financial leasing players, financial leasing companies are few in number but strong in strength; more than 20 companies account for nearly half of the industry's business scale.

    With a good wind to rely on, one can rise to the blue clouds. The attention of regulators and judicial authorities has improved the environment and paved the way for the development of financial leasing.

    At a higher level, the Third Plenary Session of the 18th CPC Central Committee proposed handling the relationship between the government and the market well and letting the market play a decisive role in allocating resources, which will open up broader development space for China's financial leasing industry.

    The state recently issued opinions supporting the development of the aircraft leasing business, aiming to accelerate the development of China's aircraft leasing through policy guidance and build China into one of the gathering places for global aircraft leasing enterprises. For the industry, this is an opportunity. In fact, aviation and equipment manufacturing are the fields most suited to giving play to the function of financial leasing, and China's financial leasing industry also originated in the aviation field.

    On December 19 last year, with the smooth delivery of two Airbus A320s in Germany, ICBC Leasing had delivered and put into operation more than 150 aircraft and owned and managed more than 360 aircraft. By then, ICBC Leasing's aircraft leasing assets had reached US$7.3 billion. ICBC Leasing's aircraft leasing assets entered the global top ten, the first time a Chinese leasing company has entered the top ten. In addition to ICBC Leasing, other financial leasing companies have also performed in this field. CDB Leasing owns 150 leased aircraft through purchasing asset packages from international leasing companies; Bocomm Leasing, after successfully setting up a subsidiary in the Shanghai Free Trade Zone, immediately launched the first aircraft leasing business in the free trade zone; Minsheng Leasing also announced that it would enter the field of large aircraft leasing.

    Equipment manufacturing is one of the pillar industries for China's economic upgrading. According to China's "12th Five-Year Plan" for equipment manufacturing, by 2015 the sales revenue of China's high-end equipment manufacturing industry will exceed 6 trillion yuan, and through 10 years of effort a high-end equipment manufacturing system will be formed. In September 2013, Shenyang Machine Tool (5.46, -0.03, -0.55%) Group, a leading enterprise in China's equipment manufacturing industry, signed a strategic cooperation agreement with ABC Leasing; in December, the large container ship ordered by ICBC Leasing started construction at the Hudong Shipyard. In the transformation of the equipment manufacturing industry, the financial leasing industry will play a greater role.

    At the current pace of development, China's becoming the world's largest leasing country is just a matter of time. Li Siming, executive vice president of the China Leasing Enterprises Association and chairman of the Leasing Industry Working Committee of the Foreign Investment Enterprises Association, said that the tax rules for the financial leasing industry are already quite complete, the regulations of the China Banking Regulatory Commission and the Ministry of Commerce for supervising the financial leasing industry are also quite complete, and the new judicial interpretation on financial leasing will be issued soon. In 2014, China's financial leasing industry will still be a year of rapid development.