Transitional Period for China’s New Asset Management Rules Extended to End of 2021 Due to COVID-19

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The Chinese central bank has extended the transitional period for new asset management rules first launched at the start of 2018 until the end of next year.

The People’s Bank of China (PBOC) announced on 31 July that the transitional period for the “Guid­ance Opin­ions Con­cern­ing Stan­dard­i­s­a­tion of As­set Man­age­ment Op­er­a­tions by Fi­nan­cial In­sti­tu­tions” (关于规范金融机构资产管理业务的指导意见) will be extended until the end of 2021, from its original concluding date of the end of 2020.

The Guidance Opinions were first launched in April 2018, and removed the “implicit guarantees” on bank wealth management products (WMP’s), making it more difficult for smaller lenders to employ the instruments as a channel for tapping funds from retail depositors.

According to PBOC the Guidance Opinions have thus far “effectively contained asset management malfeasance, markedly reduced shadow banking risk, and gradually driven asset management operations back to their original source.”

PBOC said that the extension of the transitional period was due to “consideration of the impacts of the Novel Coronavirus on the economy and finance since the start of this year, and the considerable pressure faced by standardised transition of the asset management operations of financial institutions.”

A research report released by Tsinghua University in July called for the extension of the asset management rules for an even longer period, until the end of 2022.

An analyst from CITIC Securities said that the extension of the transitional period “does not mean the direction of reform of the asset management sector will change.”

“The policy arrangements for extension of the transitional period give comprehensive consideration to the shock of the pandemic, the macro-economic environment, market impacts and financing for the real economy…[this] a pragmatic and empirical decision.

“It upholds the original intention and bottom line for the new asset management regulations to deal with financial malfeasance and standardise healthy development, and does not involve any changes or adjustments to regulatory standards for asset management operations.”

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