Financial sector under closer regulatory watch

Premier Li’s comments come as officials target risky assets, corruption

China’s rapidly expanding financial industry is being placed under greater regulatory scrutiny as authorities step up efforts to curb widespread malfeasance in the sector.

In remarks published Sunday, Premier Li Keqiang said that the country’s financial sector is vulnerable to risks such as bad assets, bond defaults, shadow banking and Internet financing, with frequent illegal and corrupt activities.

To bring order to the market, the premier called for efforts to crack down on bank violations when it comes to extending credit, insider trading in the securities market and insurance fraud. He urged “relentless” punishment of internal supervisors and company managers who collude with major players in the market and steal and sell confidential information.

On the same day, the top anti- graft authority announced that Xiang Junbo, chairman of the China Insurance Regulatory Commission, was being investigated for suspected violation of the code of conduct of the Communist Party of China.

Li’s message was the latest from high- level officials who have repeatedly highlighted the importance of containing financial risks as China faces a build- up of debt and booming new financial products challenge regulations.

Since China’s Central Economic Work Conference in December cited preventing financial risks as a priority, regulators from the banking, securities and insurance sectors have started to clean up the market.

In the first quarter of 2017, China’s banking regulator meted out 485 administrative penalties with fines totaling 190 million yuan ($ 27.54 million).

Also, 197 people were held accountable for banking irregularities in the period, of whom 19 were disqualified from holding executive positions and 11 barred from the banking business, according to the China Banking Regulatory Commission ( CBRC).

Yang Jiacai, assistant to the CBRC chairman, said that the commission will issue guidelines to regulate the market.

In the capital market, China’s securities regulator has maintained a zero tolerance position on illegal market activi- ties such as insider trading and stock manipulation, after the market rout in 2015 shattered investor confidence.

Last month, the China Securities Regulatory Commission imposed a 3.47 billion yuan fine on Xian Yan, chairman of P2P Financial Information Service Co, for market manipulation, a record high.

The high- profile punishments underscore government determination to balance stable growth and financial risk control, according to analysts.