New Regulatory Framework Set to Accelerate Chinese Financial Reforms


Analysts expect the merger of China’s banking and insurance regulators and the establishment of the Financial Stability and Development Committee to accelerate the launch and implementation of new financial regulations.

The newly formed China Banking and Insurance Regulatory Commission unveiled its official placard on 8 April as well as launched its official website, adding more finishing touches to the merger of the banking and insurance authorities.

The State Council announced the merger of the China Banking Regulatory Commission (CBRC) and the China Insurance Regulatory Commission (CIRC) at the country’s Two Sessions in March, in what is considered to be the biggest shake-up of the country’s financial regulatory system in 15 years.

China’s financial regulatory system previously consisted of the “One Bank and Three Commissions” (一行三会), comprised of the People’s Bank of China (PBOC), CBRC, CIRC and the China Securities Regulatory Commission (CSRC).

Following the merger China’s new financial regulatory framework now consists of the “One Committee, One Bank and the Two Commissions” (一委一行两会), referring to the Financial Stability and Development Committee, PBOC, CBIRC and CSRC.

Chinese officials have said that they hope the new configuration will improve the coordination and efficiency of financial regulation, as well as addresses problems in relation to regulatory gaps, regulatory arbitrage, as well as regulatory reduplication.

Observers now expect the new financial regulatory framework to focus on enhancing coordination between central and local authorities, as well as strengthening regulation of fintech, financial holding companies and shadow banking.

They also expect the implementation of new financial regulations, such as China’s much-anticipated new asset management regulations, to accelerate as a result of this improve coordination between authorities.

Jiang Chao (姜超), chief economist with Haitong Securities, said to China Securities Journal that the recently formed Financial Stability and Development Committee will serve as a deliberation and coordination body for key issues in relation to financial stability and development.

According to Jiang FSDC will strengthen communication and coordination between China’s financial authorities, and abet a reduction in regulatory blanks as well as the eradication of regulatory arbitrage.