China to merge banking and insurance regulators

BEIJING: China is merging its banking and insurance regulators and creating a slew of ministries including a new agricultural and rural affairs ministry as part of the biggest government shake-up in years. The long-awaited move to streamline and tighten oversight of the $42 trillion banking and insurance sectors comes as authorities seek more clout to crack down on riskier lending practices and reduce high corporate debt levels.
The revamp is also part of broader reforms by President Xi Jinping as the leadership of the ruling Communist Party is being resolutely placed at the heart of policy-making and Xi himself at the core of the party.
Liu He, Xi’s top economic adviser and confidante, has emerged as a prominent voice in the party on trade and economic matters.
Writing in a commentary in the official People’s Daily on Tuesday, Liu said reforms would be profound.
“Deepening the reform of the party and state institutions is an inevitable requirement for strengthening the long-term governance of the party,” Liu said.
The economy and the party have become ever more intertwined since the once-in-five-years party congress in October when Xi cemented his grip on power.
On Sunday, presidential term limits were removed from its constitution, giving Xi the right to remain in office indefinitely, and confirming his status as the country’s most powerful leader since Mao Zedong died more than 40 years ago.
The heads of the new merged regulator, ministries and departments will be announced before the close of the annual session of parliament on March 20. Many Xi allies are expected to get top appointments including the chair of the National People’s Congress, or parliament, and National Supervisory Commission.
China is among the global economies seen as most vulnerable to a banking crisis, the Bank for International Settlements (BIS) said at the weekend, though Beijing has maintained that debt risks are under control.
Speculation that China was considering the creation of a super financial regulator has been rife since the Chinese stock market crash of 2015, which has been blamed in part on poor inter-agency coordination.
The merger of the China Banking Regulatory Commission (CBRC) and China Insurance Regulatory Commission (CIRC) is aimed at resolving existing problems such as unclear responsibilities and cross-regulation, according to the parliament document.
The new merged entity will directly report to the State Council, or cabinet.
The function of making important laws and regulations of CBRC and CIRC will be transferred to the People’s Bank of China as the central bank takes on a bigger role. — Reuters