Beijing to set up new financial regulator

China plans to strengthen oversight of its $60 trillion financial system by setting up an enlarged national regulator while taking some duties away from the central bank.

The new body will absorb its banking and insurance watchdog and oversee all financial sectors except the securities industry, according to a plan announced at the National People's Congress Tuesday. It will take over functions including oversight of financial holding companies such as Ant Group Co. from the central bank.

"The purpose of the new regulatory body is to make sure that it encompasses some of the blind spots in regulating illicit practices in finance, and under one umbrella to make sure that there's no room for shrugging off responsibilities," said You Lanqiang, a fund manager at Pingtan Strategic Asset Management Co.


The shake-up will give the Communist Party a firmer grip on the sector and centralize key policy decision-making under President Xi Jinping in his precedent-defying third term. It marks the latest development in a decade-long effort to push for consolidation or at least greater cooperation among China's financial regulators, and follows an earlier merger of the banking and insurance watchdogs.

The China Banking and Insurance Regulatory Commission will cease to exist after the overhaul, while the China Securities Regulatory Commission will be elevated to become a government agency directly under the State Council, according to the plan.

The moves are aimed at "solving the long-standing conflicts and issues in the financial area," according to the plan. The new authority will be focused on stepping up oversight of financial institutions and cracking down on violations, it said.

The fact that the CSRC remains independent shows "that the authorities see the size of the stock market and its role in the economy rising in the years to come as the pool to absorb household assets, taking over the baton from property in the coming years," said You. Bloomberg