Source: Global Times Published: 2017-7-17
China unveiled reform plans for the financial sector to better serve the real economy while guarding against risks.
China must strengthen the Communist Party of China leadership`s financial work, stay focused on seeking progress while maintaining stability, and respect financial development, President Xi Jinping said at the two-day National Financial Work Conference that ended Saturday, the Xinhua News Agency reported.
The conference has been held every five years since 1997 and is widely believed to set the tone for financial reforms.
Three tasks are highlighted in the meeting, including making the financial sector better serve the real economy, containing financial risks and deepening financial reforms.
To achieve the goals, a financial stability and development committee under the State Council will be established and the central bank`s role in averting systemic risks will be strengthened, Xi announced.
The government will continue to deleverage the economy through a prudent monetary policy and giving priority to reducing leverage in State-owned enterprises, Xi said.
China will also accelerate the development of laws and regulations governing the financial sector, improve macro prudential management and emphasize functional and behavioral regulation, according to Xi.
"The meeting sets the tone for the country`s finance reforms in the years to come, which will focus on curbing speculation in the financial sector," Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, told the Global Times on Sunday.
There have been lingering concerns about China`s credit-fueled growth and risks of an assets bubble. China`s economy grew by 6.7 percent in 2016 on the back of Chinese banks` record new yuan loans of 12.65 trillion yuan ($1.87 trillion), official data show.
Financial regulatory coordination needs to be strengthened and weak links in supervision improved, Xi said, adding that regulators face greater accountability. It will be considered a "dereliction of duty" if regulators fail to spot and cope with risks on time.
The world`s second-largest economy will further open up its financial market to promote the internationalization of the Chinese yuan and capital account convertibility at a steady pace, Xi added.
The meeting comes at a time when China faces financial risks at home and overseas.
The new financial stability committee is not simply an upgraded version of the joint ministerial meeting mechanism for financial regulatory coordination approved by the State Council in 2013, said Bian Yongzu, a research fellow at the Chongyang Institute for Financial Studies at the Renmin University of China, noting it is tasked to solve problems which the current regulatory framework cannot do.
Along with the fast-paced financial innovation the Internet provides, regulatory turf conflicts are increasing among the People`s Bank of China, the central bank, and the three main financial regulators: the China Banking Regulatory Commission, the China Securities Regulatory Commission and the China Insurance Regulatory Commission, which has market watchers calling for more efficient oversight.
The central bank and the top banking, securities and insurance sector regulators largely operate independently, but the boundaries of different financial activities are becoming blurred, which means many financial activities can`t be efficiently supervised or managed, Xu Hongcai, deputy chief economist at the China Center for International Economic Exchanges, told the Global Times on Sunday.
Though the committee`s relationship with the central bank has yet to be defined, it is expected to be above the central bank and all three financial regulators to better supervise and coordinate the finance sector, Dong said.
The country will likely soon release more detailed policies in assets management supervision and the collection of financial sector statistics at a unified level, E Yongjian, chief financial analyst with the Bank of Communications, wrote in a research note released on Sunday.
The meeting also urged that new local government debt be reined in and, for the first time, local government officials should be held "accountable for life." Furthermore, Internet financial activities will come under stricter oversight.
It`s time to better regulate the Internet financial sector where there is increasing disorder and could be a source of systemic financial risks, according to Bian, who said that any innovative financial activities not aimed at serving the real economy should be stopped.
Bian Yongzu, a research fellow at the Chongyang Institute for Financial Studies at the Renmin University of China.