Explainer | Why is China’s national financial work conference important? Key decisions since 1997 and what to expect this year
- National financial work conference set to start on Monday, with the property sector, small banks and local government financing vehicles set to be top of the agenda
- It will be the sixth national financial work conference since 1997, with the high-profile meeting often chaired by the top leaders
China is expected to hold its sixth national financial work conference this week, an important occasion for regulators to assess the current crisis in the property sector and at small banks, as well as the status of local government financing vehicles.
Since the first meeting in 1997, which was a direct response to the Asian financial crisis, the national financial work conference has made key decisions to plot China’s financial direction.
1997: countering the Asian financial crisis
The first meeting was a direct response to the Asian financial crisis in 1997-98, when the capital adequacy ratio of China’s big four state-owned banks was only 3.5 per cent – far below the international standard of 8 per cent.
The Industrial and Commercial Bank of China, China Construction Bank, the Agricultural Bank of China (ABC) and Bank of China were called technically bankrupt by some Western economists due to bad loans.
The meeting decided to set up the Central Financial Work Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission to supervise the financial system.