China’s top trade war negotiator handed more control at home as Beijing expands reach of finance committee
- The Financial Stability and Development Committee, under Vice-Premier Liu He, will be upgraded into a de facto governing body with local branches
- China was rocked by three bank failures last year, while the phase one trade deal with the US is set to include chapters about opening up China’s financial services market
Vice-Premier Liu He has been given increasing power and control over China’s financial industry, with the remit of the finance committee under his purview greatly upgraded to become a de facto full governing institution with local branches.
Under the new arrangements, the central bank’s provincial chiefs will be entitled to convene meetings with banking, insurance, securities and foreign exchange regulators as well as local economic planners, financial service and fiscal departments, to discuss matters concerning regional financial stability.
“It aims to strengthen the coordination between central and local governments in terms of financial regulation, risk disposal, information sharing and consumer protection,” said a statement regarding the changes to the committee, which includes members from China’s central bank, the banking regulator as well as the securities market watchdog.
“The authority has realised that it can’t solely depend on the central bank or banking regulators. Actually, many are social issues and need on-the-ground coordination and law enforcement,” said Ding Shuang, the chief Greater China economist at Standard Chartered Bank.
“As 2020 marks the last year of Beijing’s campaign to reduce financial risks, it must ensure there’s no mass incidents in the financial industry.”
The committee has already stepped up its activities in recent weeks having held five meetings over the last month and a half, a sharp rise from previously only meeting once a month.
At the 10th meeting held on November 28, the committee discussed the next steps of how to tackle financial risks and the work of financial opening-up.
Last week, the 14th meeting vowed to help small businesses obtain more credit “as early as possible” and to provide banks with “incentives”.
“For the next step, the regional coordination mechanism will try to strengthen regulatory cooperation, so that they can better serve the real economy, prevent financial risk and deepen financial reform,” the statement from the central bank added.