Cabinet to nurture 鈥榮uper regulator鈥 system
Print Edition
China鈥檚 Cabinet is taking a key first step toward tighter control of its financial regulatory apparatus, a source said, as the world鈥檚 second-largest economy struggles.
A source close to the leadership said the State Council has set up a working group to upgrade the Cabinet鈥檚 financial department to bureau level to serve as an interim manager of the process until a 鈥渟uper regulator鈥 structure can be put into place.
The source said the group would be headed by Xiao Jie, a former vice finance minister and tax chief now serving as deputy secretary-general of the State Council.
The move comes after renewed turmoil in China鈥檚 stock and currency markets has sparked fresh concerns that the current regulatory structure is not up to the task of maintaining market stability in the context of weak economic performance.
鈥淭he leadership is very unhappy about the stock market crisis. A merger of the regulators may take years to complete,鈥 said the individual close to China鈥檚 leadership, adding that this time frame has prompted leaders to look for a sort of midwife structure that could help lead to the new institution.
Officials at the Cabinet did not respond to requests for comment.
A 鈥渟uper regulator鈥 would theoretically supervise China鈥檚 insurance, stock and banking regulators 鈥 an idea that Beijing started looking into after last summer鈥檚 stock market crash was blamed in part on poor coordination between financial regulators. But this could take months or years to implement.
Promotion should increase the status of the Cabinet鈥檚 department and of its chief, giving him the leverage to force regulators accustomed to acting independently to coordinate with each other.
Xiao Jie is not associated with any of the institutions he would help coordinate, so would not be seen as serving the interests of one over the other.
The central bank, too, is trying to increase its say in supervising China鈥檚 financial markets, adding to the uncertainties over possible regulatory reforms, sources said.
鈥淚t鈥檚 hard to predict when reforms may start, but the central bank and the three regulators need to strengthen their communications and coordination,鈥 said an influential economist who advises China鈥檚 parliament.
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