China must control financial risk as its markets open wider, regulatory body says
- ‘We must clean up all the financial mess and have zero tolerance for irregularities,’ agency chaired by Vice-Premier Liu He says
- Reform of large state-owned banks among targets outlined at meeting of Financial Stability and Development Committee
China must safeguard against financial risk as it prepares to open its markets wider to private and foreign investors, a regulatory body chaired by the country’s top economic adviser said on Saturday.
“We must clean up all the financial mess and have zero tolerance for irregularities,” the Financial Stability and Development Committee (FSDC) said in a statement released online.
China’s financial stability body steps up meetings amid heightened risks
There will also be a “higher-level opening” of China’s markets, according to the communique issued after the Communist Party’s latest plenary session, which will create new challenges for the state-controlled financial system and test the government’s ability to manage the flow of so-called hot money into the country.
Hundreds of billions of yuan worth of funds have flowed into China’s bond and stock markets in recent years, and Wall Street conglomerates have stepped up their efforts to establish their presence in China’s onshore market.
The FSDC statement outlined several targets, including the reform of large state-owned banks, the creation of a registration mechanism for initial public offerings to allow businesses better access to direct financing, and ensuring smoother cross-border capital flows.
It stressed the importance of new technologies and innovation, but said robust supervision, transparency and information disclosure, fair competition and the enforcement of antitrust laws were also critical.
“We need to encourage innovation and entrepreneurship, but also strengthen regulation,” the statement said.
“All financial activities must be put under close scrutiny for the sake of risk prevention.”