China unveils plan to keep officials’ noses clean in campaign to control financial risk

At a meeting of China’s Politburo, a plan was reviewed to keep officials accountable as the country moves to mitigate financial risk

As troubles mount in the system, with property market and local governments feeling the heat, Beijing emphasises need for firm hand

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China’s Politburo has reiterated the need for risk control in the country’s financial system, and has presented a method for ensuring accountability among officials and regulators. Photo: Xinhua

Published: 8:00pm, 27 May 2024

China’s Politburo – a high-level decision-making body of the country’s Communist Party – reviewed a pilot accountability mechanism for financial de-risking on Monday, the latest offensive in Beijing’s campaign to address deep-rooted hazards in the financial system and the crisis-plagued property sector.

The blueprint for how to keep financial actors like watchdogs, state-owned financial institutions and local cadres more accountable comes at a time when Beijing has redoubled its efforts to shore up the troubled real estate market and strengthen local regulatory regimes, all while taking steps to ensure it can meet its annual gross domestic product growth target of around 5 per cent this year.

“[The plan] is aimed at entrenching the party’s leadership and consolidating the responsibilities of regulators, financial institutions and local authorities in the financial field,” according to a readout of the meeting from Xinhua.

At the meeting, chaired by President Xi Jinping, cadres at all levels were urged to establish a “correct concept of performance” for the implementation of directives on financial supervision and risk management.

More stringent implementation, oversight and punishment was also encouraged to ensure financial regulation has teeth.

The situation has become so rampant that Beijing feels the need to set up such an accountability mechanism to rein them in

Fu Weigang, Shanghai Institute of Finance and Law

Xi declared risk prevention and mitigation an “eternal theme” governing all finance policy at October’s twice-a-decade central financial work conference. The president has also named stronger oversight from the party against risks, both from home and abroad, as a pillar of his ambitions for the country to become a “financial superpower”.