Xi pushes better risk controls for China Central Bank
16 Jul 2017 - 0:23
Beijing: Chinese President Xi Jinping said the central bank will play a stronger role in defending against risks, calling for more work on safeguarding the financial system and modernizing its regulatory framework.
Financial security is part of national security, and Communist Party leaders must step up their work toward that goal, Xi said during the twice-a-decade National Financial Work Conference held, state media reported yesterday.
Xi also said China will set up a commission under the State Council to oversee financial stability and development and urged the financial sector to better serve the real economy. In a speech to the gathering, Xi said prudent monetary policy, a goal announced in December, should be firmly implemented.
The PBOC should also take a stronger macro-prudential policy role, Xi added. He also called for greater yuan exchange-rate reform, an improved foreign-exchange market system, and steady progress in yuan internationalization, according to the reports from state media.
Xi is ramping up efforts to ensure stability ahead of a twice-a-decade leadership transition this fall at the 19th Communist Party Congress. He has elevated curbing risk in the $40 trillion financial industry to a new level with “strategic importance” amid increasingly intertwined business between China’s banks, brokerages, asset managers and insurers.
Premier Li Keqiang also spoke at the meeting, calling for the maintenance of moderate credit growth and keeping liquidity “basically stable,” according to state television. He also called for “professional, consolidated, penetrating” regulation of all financial businesses to reduce risks.
“China’s top leadership has shown greater concern over the need to strengthen financial stability,” Kim Eng Tan, a credit analyst at S&P Global Ratings in Singapore, wrote in a recent report. “We are likely to see better coordination among various government agencies, compared with some foot-dragging in the past.
“Xi also called for a strengthening of accountability for regulators, saying it’s a “dereliction of duty” if they fail to spot and dispose of risks in a timely manner, and stressed that coordination of financial regulation should be improved, and weak links in supervision strengthened.
The financial work conference has held a special place in China’s economic and political calendar since it was introduced to encourage more sustainable economic growth after the Asian financial crisis. The first, in 1997, saw the establishment of an insurance regulator and a plan to bail out the largest banks.
The second gathering led to the creation of a banking regulator and a drive to list major state-owned lenders on overseas stock exchanges. In 2007, the conference oversaw the creation of the sovereign wealth fund, China Investment Corp., which now has $813.5bn of assets.