PBOC is new pivot in major overhaul of financial sectorBusiness | Tracy Hu Mar 14, 2018
The China Banking Regulatory Commission and the China Insurance Regulatory Commission will be merged in the biggest industry overhaul since 2003.
Some of their functions, including drafting key regulations and prudential oversight, will move to the People's Bank of China, says a proposal unveiled during the National People's Congress yesterday.
A new regulatory structure with the PBOC as the pivot is emerging as the meetings move through their second week. Still to come are personnel changes, including the expected appointment of Politburo member Liu He as a vice premier in charge of financial and economic affairs, making him President Xi Jinping's go-to official as he seeks to avert a financial crisis after years of rapid credit growth.
"The PBOC has more power: It has added the role of lawmaking to its previous role as the adviser on monetary policy," said Zhou Hao, an economist at Commerzbank in Singapore.
"The PBOC's role will largely be policy making and the newly merged bank and insurance regulator will mainly be the policy executor. And the other thing for sure is that Liu He will play a more important role in China's reforms."
"Finance is core to a modern economy and we must pay high attention to prevent financial risks and safeguard national financial security," the text of the proposal said, adding that it is intended to reconcile overlaps in regulatory oversight.
The regulatory changes echo wider moves unveiled yesterday to consolidate the power of the Communist Party and tighten Xi's grip on China. "Strengthening the party's leadership in all areas of work is the primary task of deepening the reform of the party and state institutions," Liu wrote in an article on the reforms published by the People's Daily newspaper.