You are here
China's cabinet to have greater financial supervision role: source
[BEIJING] China's cabinet is set to take on a bigger role in overseeing financial markets, as perceived missteps by existing regulators fuel concerns globally that Beijing may lose its grip on economic policy with growth at its slowest in a quarter of a century.
The State Council has set up a working group, headed by deputy secretary-general Xiao Jie, a former vice finance minister and tax chief, to prepare for upgrading the cabinet's financial department to bureau level, said a source close to the country's leadership.
After last summer's stock market crash was blamed in part on poor coordination between financial regulators, sources said China was considering merging its banking, insurance and securities watchdogs into a single 'super-commission'.
This month's renewed stock market turmoil has made it more urgent to unify China's regulatory system to restore confidence in markets and ward off financial risks.
"The leadership is very unhappy about the stock market crisis," said the source. "A merger of the regulators may take years to complete." Thus the move towards an interim 'agency', with the promotion of the cabinet's financial department.
Officials at the cabinet were not immediately available for comment.
Bloomberg earlier reported that the cabinet has created a new department, within its general office, to coordinate between the financial and economic regulators, with Agricultural Bank of China Vice President Li Zhenjiang in charge of daily operations.
Giving the cabinet department more oversight now would give Beijing more time to finalise any merger of existing regulatory authorities, which could be sensitive in terms of potential job losses and internal rifts between powerful state agencies.
The central bank, too, is trying to increase its say in supervising China's financial markets, adding to the uncertainties over possible regulatory reforms, sources said.
The People's Bank of China (PBOC) said last month it will introduce a new system to assess macro-prudential risks in the financial system this year as banking assets become more diversified.
Last week's renewed market turmoil highlighted some of the issues with having various financial market regulators in China.
In a surprise move on Thursday, the People's Bank of China (PBOC) weakened its morning yuan guidance, allowing for the currency's biggest fall in five months. On the stock market, investors panicked, pushing down share prices and triggering new circuit breakers. The sell-off rippled across markets worldwide. The circuit breakers were later axed.
"It's hard to predict when reforms may start, but the central bank and the three regulators need to strengthen their communications and coordination," said an influential economist who advises China's parliament.