China will create a powerful financial regulator led by the Communist Party

China will set up a Communist Party-led financial regulatory body, state media reported on Thursday, as part of a sweeping reorganization of government bodies to give the ruling party direct control and oversight over financial affairs.

The creation of the Central Financial Commission will see the dissolution of the State Financial Stability and Development Committee (FSDC), a powerful body created in 2017 and led by former Deputy Prime Minister Liu He to reduce risks in the complex and often opaque financial system . from China.

The new regulator will be responsible for the design, development and high-level supervision of the financial sector, strengthening “unified leadership in finance work,” according to a plan reported by state media.

To strengthen the party’s ideological and political role in China’s comprehensive financial system, a Central Financial Work Commission will also be established.

The reshuffle of party and state finance bodies comes after Xi Jinping secured an unprecedented third term as party leader in October and also a new term as president earlier this month, making him China’s most powerful leader since times of Mao Zedong. .

“The line between the party and the government has become decidedly blurred, so there’s no way for the new financial watchdogs to contradict what the party wants,” said Yan Wang, China’s chief strategist at Alpine Macro, a company global investment firm headquartered in Montreal.

“From an investor perspective, the short-term impact of the regulatory review is unlikely to be significant. Boosting growth is clearly Beijing’s top priority, so it is unlikely to disrupt the market and hurt the economy with drastic changes in policies,” Wang said. .

A detailed reform plan for state institutions was unveiled at China’s annual parliamentary meeting which ended on Monday.

Under the State Council, led by new premier Li Qiang, China will set up the National Financial Regulatory Administration to regulate the country’s $57 trillion financial sector, excluding the securities sector.

The banking and insurance regulator will be abolished and some functions of the central bank and securities regulator will be transferred to the new financial management.

Separately, China will establish a new Central Technology Commission to strengthen the party’s centralized leadership in science and technology.

A central office for Hong Kong and Macao will be established to supervise the implementation of the “one country, two systems” policy and implement the governance of the central government in the two administrative regions.

The Hong Kong and Macao Affairs Office under the State Council will be abolished.

The country intends to complete the reorganization of central government institutions by the end of 2023.

Source: Terra

Rose

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