People’s Bank of China governor Zhou Xiaochuan says the country can be bolder in opening its financial markets. PHOTO: AP
Shanghai | China is merging its banking and insurance regulators as part of the biggest shake-up of the country’s vast bureaucracy in decades as President Xi Jinping tightens the ruling Communist Party’s supervision of the financial system and clamps down on risky lending.
The number of ministries under the State Council, which is effectively China’s Cabinet, will be reduced by eight to 26 under the overhaul, which seeks to clean up a system where different government agencies competed against each other. It will also create new agencies overseeing immigration, environmental protection and natural resources.
The shake-up, announced on Tuesday, also confirmed the creation of a powerful anti-corruption body called the National Supervision Commission, which will have enhanced authority to police workers throughout the public service and in state-owned enterprises. Human rights groups have raised concerns about the commission’s powers to detain suspects for up to six months without charge.
However, the most watched changes on international markets will be the administrative shake-up of the regulatory bodies supervising the country’s debt-laden financial sector, a key risk to the stability of the world’s secondlargest economy. The complexity of the central government bureaucracy had failed to keep pace with the country’s rapid-fire economic growth and contain risky lending practices in the shadow banking sector.
The changes were announced during the second week of meetings of China’s national parliament in Beijing. The rubber-stamp National People’s Congress, which on Sunday backed constitutional changes allowing Mr Xi to rule for life, is expected to formally approve the proposals later this week.
The administrative shake-up will give Mr Xi tighter control on the economy than his predecessors. Economists and investors said while longawaited reforms of the financial sector and state-owned companies have not eventuated, the restructuring of the bodies supervising the economy reflected models used in developed countries and would help China better manage debt.
‘‘They have taken best practice from developed markets and tweaked it. It is more of a centralisation and streamlining of regulatory oversight and will make things more efficient,’’ Nicholas Britz, a senior associate at Shanghai analytics firm Z-Ben Advisors, told The Australian Financial Review .
‘‘It was a bit like a bucket with holes in it before. You would have shadow banking done through a fund manager, securities firm or a trust company but as the various regulators tightened or loosened, shadow banking would switch across various sectors.’’
Economists said the measures would also transfer some of the responsibilities from the banking and insurance regulators to the People’s Bank of China, which is expected to appoint a new central bank governor this weekend.
Mizuho currency strategist Ken Cheung said the aggressive overseas acquisition strategies by Chinese companies and the rapid expansion of the shadow banking sector highlighted the poor job the existing banking and insurance regulators had done managing risk.
He said the appointment of a strong central bank governor was important to overhauling the regulation of the country’s financial markets. Mr Xi’s top economic advisor Liu He is tipped to be announced as the new central bank governor, replacing long-serving Zhou Xiaochuan.
A structural shake-up of the financial regulators had been expected since Mr Xi announced the creation of the a Financial Stability and Development Committee in July last year.
Mr Britz said the changes would make China more attractive to investors and financial services firms in Australia and elsewhere. ‘‘For a global manager it is a clearer, cleaner and better defined asset management industry,’’ he said.
National Australia Bank and Macquarie Group have both exited their Chinese investments.
网友评论