China Advances Local-Level Financial Regulatory Reforms to Strengthen Supervision
Beijing, The Gulf Observer: China’s ongoing financial regulatory reforms, initiated at the central level, have now transitioned to the local level, marking a significant step towards enhancing financial stability and development across the nation.
At the central level, the Central Financial Commission and the Central Financial Work Commission were established last year to ensure comprehensive planning and coordination in financial stability and development. Concurrently, the National Administration of Financial Regulation emerged as China’s new financial regulatory body.
Over 20 provincial-level regions have followed suit by establishing local agencies aligned with the central financial regulatory authorities, signaling a move towards stronger leadership from the Communist Party of China at the local level, according to Dong Ximiao, a researcher at the Institute for Financial Studies, Fudan University.
The integration of local financial regulatory branches aims to foster a more interconnected relationship between central and local supervision. This collaboration is expected to enhance coordination, ensuring consistency in actions and policies, and improving the overall efficiency of local financial supervision.
Dong Ximiao emphasized the need to adjust and divest the functions of local financial regulatory bodies, separating their roles as “judges” and “athletes.” This approach allows them to concentrate solely on regulation and risk prevention.
Zeng Gang, deputy director of the National Institution for Finance and Development, highlighted the necessity for collaboration in both daily supervision and risk resolution. He cautioned against regulatory arbitrage arising from inconsistent central and local regulatory rules, emphasizing the importance of unified actions and policies for comprehensive financial supervision coverage.
As China continues its pursuit of becoming a financial powerhouse, the central financial work conference held in October underscored the importance of accelerating the development of a robust financial sector at a strategic level. Despite the increased strength and influence of China’s financial institutions, with over 4,000 banking institutions and five global systemically important banks, the sector’s development remains uneven, requiring further strengthening of competitiveness.
In the face of complex financial innovation, the task of risk prevention remains challenging, making the coordination of central and local supervision imperative. The ongoing reforms align with China’s commitment to high-quality development in the financial sector, reflecting the nation’s determination to solidify its position as a global financial leader.
