Panel will over­see devel­op­ment and re­vise reg­u­la­tory struc­ture

China Daily (Hong Kong) - - TOP NEWS - By LI XIANG lix­i­ang@chi­nadaily.com.cn

Bet­ter co­or­di­na­tion among reg­u­la­tors to guard against sys­temic fi­nan­cial risks and more poli­cies im­prov­ing the fi­nan­cial sec­tor’s ef­fi­ciency to serve the real econ­omy can be ex­pected af­ter a top fi­nan­cial meet­ing of Chi­nese pol­i­cy­mak­ers, an­a­lysts said on Sun­day.

In a speech at the two-day Na­tional Fi­nan­cial Work Con­fer­ence, which ended on Satur­day in Bei­jing, Pres­i­dent Xi Jin­ping em­pha­sized three key tasks of the fi­nan­cial sec­tor: strength­en­ing its abil­ity to serve the econ­omy, pre­vent­ing sys­temic risks and deep­en­ing fi­nan­cial re­form.

One ac­com­plish­ment of the meet­ing is China will set up a com­mit­tee un­der the State Coun­cil, China’s Cab­i­net, to over­see fi­nan­cial sta­bil­ity and devel­op­ment.

An­a­lysts said this is an en­cour­ag­ing sign of ef­forts to fix the frag­mented reg­u­la­tory struc­ture and to im­prove the co­he­sive­ness of fi­nan­cial reg­u­la­tion.

“The cen­tral bank will play a big­ger role of con­tain­ing fi­nan­cial risks. Its co­or­di­na­tion with the three reg­u­la­tors of bank­ing, se­cu­ri­ties and in­sur­ance will also be strength­ened,” said Li Shao­jun, an an­a­lyst at Guo­tai Ju­nan Se­cu­ri­ties.

The fi­nan­cial meet­ing, held ev­ery five years, was con­sid­ered a tone-set­ting gath­er­ing for China’s fi­nan­cial poli­cies and re­forms in the com­ing years.

Pol­i­cy­mak­ers at the meet­ing also em­pha­sized the need to de­velop the di­rect fi­nanc­ing mar­ket to fund busi­nesses and re­duce the debt of Sta­te­owned en­ter­prises.

Fur­ther devel­op­ment of China’s fi­nan­cial mar­kets was en­cour­aged to bet­ter serve the real econ­omy, so more debt and eq­uity of­fer­ings may be sup­ported, pre­dicted Hong Hao, chief strate­gist at BOCOM In­ter­na­tional.

China’s fi­nan­cial in­dus­try

The cen­tral bank will play a big­ger role of con­tain­ing fi­nan­cial risks. Its co­or­di­na­tion with the three reg­u­la­tors of bank­ing, se­cu­ri­ties and in­sur­ance will also be strength­ened.” Li Shao­jun, an an­a­lyst at Guo­tai Ju­nan Se­cu­ri­ties

has grown rapidly in the past years, with its share in the coun­try’s GDP reach­ing 8.4 per­cent in 2015, up from 4 per­cent in 2005, ac­cord­ing to a Chi­nese Academy of So­cial Sciences study.

The fi­nan­cial in­dus­try’s ex­pan­sion, cou­pled with credit eas­ing to bol­ster growth, has led to ris­ing sys­temic risks, cap­i­tal spec­u­la­tion and a surge of shadow bank­ing, ex­ist­ing some­times in a reg­u­la­tory void.

Shen Jian­guang, chief econ­o­mist of Mizuho Se­cu­ri­ties Asia, said sev­eral oc­curences that posed threats to China’s fi­nan­cial mar­kets since 2015 have high­lighted the ne­ces­sity to im­prove the reg­u­la­tory sys­tem.

“We ex­pect more poli­cies to deepen fi­nan­cial re­forms will be rolled out in the next five years af­ter the fi­nan­cial meet­ing,” Shen said.

Cheng Shi, chief econ­o­mist at ICBC In­ter­na­tional, said the meet­ing’s re­sults will help China achieve “sta­ble and grad­ual break­through” in the fi­nan­cial re­forms as the lead­er­ship has sought to lift the ef­fi­ciency of fi­nan­cial reg­u­la­tion, main­tain mar­ket or­der and sta­bil­ity, and to clar­ify the core func­tion of the fi­nan­cial sec­tor.

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