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My Take | Why a downsized central bank reflects major shifts in China’s financial governance strategy
- The newly established Central Finance Commission has replaced the People’s Bank of China as the nation’s most powerful financial decision maker
- The changes come amid concerns over years of financial market development and lax supervision, as well as heightened geopolitical risks
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China’s central bank recently eliminated 30 positions. While downsizing 4 per cent of its total headcount may seem like an insignificant move, it reflects big changes in how Beijing views the country’s financial landscape.
The job cuts by the People’s Bank of China (PBOC) took place against the backdrop of the creation of the Central Finance Commission (CFC), a Communist Party organ that has replaced the Financial Stability and Development Committee (FSDC), established by the State Council in 2017 to act as China’s supreme decision-making body on national financial affairs.
The office of the FSDC, which was originally located within the PBOC, has been closed and merged with the CFC’s office.
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That office, which the Post reported started operations in late September, is managed by Vice-Premier He Lifeng. Situated on Beijing Financial Street, it is a stone’s throw away from the PBOC, where the CFC has drawn more than 100 officials – including securities and banking regulators – to handle the country’s most pressing financial challenges.
Under this new structure, the decision-making power is now concentrated at the CFC, rendering the PBOC and other financial regulators mere enforcement apparatuses and front offices.
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