Editorial | Financial reforms by Beijing seek stability amid US pressures
- Measures not only aim to boost China’s economic development, but also help spearhead effective resistance to Washington’s containment policies
The leadership of the Chinese Communist Party has unveiled details of its plan to strengthen control over the financial sector to reduce risk and enhance national security.
The institutional restructuring coincides with a crisis of investor confidence in Western banking systems after the failure of medium-size institutions, and a rescue takeover of Swiss giant Credit Suisse.
At the same time Chinese central bank and finance officials have warned that rising US interest rates may trigger risks in developing nations and banks with high leverage and mismatched assets and liabilities.
The restructuring comes amid conflict with the United States over the attempted containment of China’s rise, which underlines the need for the mainland to control risk in its own system. The party is also strengthening leadership control over science and technology development and shaking up fragmented data security with a National Data Bureau.
The centrepiece of the restructuring is a Central Financial Committee specifically tasked with strengthening the party’s leadership over the sector and its different regulatory bodies, focusing on stability, high-level planning and policy coordination.
The reforms follow disruption and crashes over the past few years amid fragmented oversight. Part of the restructure combines banking and insurance under a single regulator and strengthens the capital market operator with a mandate to oversee stocks and bonds.