China’s financial overhaul brings more power to the party, with US$58 trillion in assets at stake
- Institutional changes seen ushering in a new era for Chinese financial regulations, with policymakers placing a high priority on financial security and challenges ahead
- Sweeping directive will also dictate how world’s second-largest economy should open its capital market wider for foreign investors
Beijing’s decision this week to broadly overhaul China’s financial sector shows how the Communist Party is entrenching its control over finance and technology like never before as it vies to tackle elevated economic risks and challenges.
And the plan is expected to have far-reaching implications – from financial regulations to foreign investors.
However, details remain scarce about the new directive, unveiled by state media on Thursday, and there are many unresolved issues regarding personnel arrangements, division of work and priorities – aspects of the plan that analysts expect authorities to cast more light on at a twice-a-decade financial conference later this year.
What is known is that a Central Finance Commission will be set up under the party’s top decision-making body, the Central Committee, strengthening its control over bureaucratic policymaking.
“The restructuring strengthens the coordination of different financial regulators, and it can effectively avoid the separate regulations of different agencies, and prevent either inadequate or excess supervision,” Citic Securities chief economist Ming Ming said on Friday. “It will be able to better prevent systemic financial risks and guide the financing support for the real economy.”