China's Parliament Reveals Major Ministry Plan
By Faith Magbanua, March 14, 2018 02:03 AM
As part of the sweeping changes to its central government structure, China has said that it has plans to merge its banking and insurance regulators.
The proposed shake-up, along with the creation of numerous new ministries, was announced by the annual sitting of the National People's Congress (NPC) earlier this week.
The move aims to combine the insurance and banking bodies and is targeting at decreasing systemic risk in the financial sector.
The reformation of China's financial landscape has been a central task for Beijing; however, questions are still raised on what will happen after the merger.
For starters, the Banking Regulatory Commission (CBRC) will be combined with the China Insurance Regulatory Commission (CIRC) to form a super regulator, overseeing all of China's banking and insurance sector.
Some of their roles will be transmitted to the central bank - the People's Bank of China (PBOC) - which will take on responsibility for making new laws and regulations.
President Xi Jinping's top economic advisor, Liu He, said that the sweeping reforms would be "profound" and would help abolish inefficiencies across state agencies.
"Deepening the reform of the party and state institutions is an inevitable requirement for strengthening the long-term governance of the party," Liu stated.
What is the relevance of this particular issue to China?
The reforms are part of President Xi's strategies to strengthen the central government's control over the economy, crack down on the financial industry and guard against excessive borrowing and risk.
The increasing level of debt being carried by some Chinese firms, by state-owned enterprises and by local governments has been a widespread cause for concern for several years.
Central bank governor Zhou Xiaochuan said that the loopholes in the financial regulatory system needed to be closed and that flaws in regulations needed to be corrected in order to defuse financial risk across the sector.
On the sidelines of the NPC - the annual parliamentary meeting - last week, he said the PBOC would take the lead in coordinating those efforts.
In addition to that, as part of recent efforts to reduce financial risk in the country, Beijing took control over China's giant Anbang Insurance Group last month.
Anbang is well-known as one of China's richest and most opaque conglomerates. It's best known for its aggressive international acquisitions, including New York's Astoria Hotel.
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