China unveils shake-up of bank regulation to rein in credit spree

Lester Mason
March 13, 2018

Divided between China Banking Regulatory Commission (CBRC) and the China Insurance Regulatory Commission (CIRC), regulators now oversee different parts of China's complex financial sector, and no single regulator has a complete picture of capital movements in the system.

China on Tuesday unveiled a massive cabinet reshuffle plan to make the government better-structured, more efficient and service-oriented.

Financial regulators have cracked down on major companies - even taking over Anbang Insurance this year - to get a handle on building risk and unwieldy debt that some analysts worry pose a serious threat to China's financial stability.

On Sunday, the parliament voted to amend the constitution to remove presidential term limits, opening the way for President Xi Jinping to rule indefinitely.

Several new ministries will be created, including a more encompassing Ministry of Agriculture and Rural Areas as well as ministries for emergency management, ecology and environment, and veteran affairs.

There will also be new administrations, such as an worldwide development cooperation agency, a state immigration administration, and a banking and insurance regulatory commission.

The draft also includes a new immigration bureau and changes to the tax system.

The securities and state assets regulators were not mentioned among the proposed changes. It's the biggest overhaul in the regulation of the industry since the creation of the CBRC in 2003.

The proposed changes outlined in the document will be discussed in parliament on Tuesday, and are expected to be formally approved by the largely rubber-stamp parliament on Saturday.

The new body will decide on antimonopoly and pricing issues, replacing the roles played by the three national antitrust regulators: the National Development & Reform Commission (NDRC), the Ministry of Commerce and the State Administration for Industry and Commerce (SAIC). It has grown rapidly in size and complexity, emerging as one of the world's largest with financial assets at almost 470 percent of gross domestic product, according to the International Monetary Fund.

Many brokerages also structure wealth management products as a channel for hidden bank lending, in addition to the more traditional business of facilitating share trades and investment banking services.

China in July previous year announced the creation of the Financial Stability and Development Committee, and since then watchdogs overseeing banks, insurers and the stock market have intensified efforts to clamp down on shadow financing and other perceived risks.

Other reports by Iphone Fresh

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