China Steps up Reform Ambitions for Policy Banks

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China’s top financial authorities have unveiled further plans for the ongoing reform of the policy banks that are responsible for advancing policy-driven lending.

The Chinese central bank convened a special meeting in Beijing on 26 July to discuss reform of the China Development Bank and Exim Bank of China – two of the big three policy banks alongside Agricultural Development Bank of China.

Other participants in the meeting included representatives from the National Development and Reform Commission (NDRC), the Ministry of Finance (MOF), the China Banking and Insurance Regulatory Commission (CBIRC), as well as commercial banks including China Construction Bank and Bank of China.

According to an official statement the meeting reached official agreement on “respecting the development status of the two banks, imparting new professional capabilities, as well as clarifying the policy and developmental demarcation between operations, and establishing appropriate capital supplementation measures.”

The meeting comes after China’s Financial Stability and Development Committee (FSDC) outlined a reform program for the policy bank earlier in the month calling for:

  • Upholding lawful compliance.
  • Improving the rules system.
  • [Implementing] one policy for each bank.
  • Gradually driving reform of outstanding and existing operations.
  • Orderly increases in transparency.
  • Strengthening of capital restraints.
  • Strengthening of risk management.
  • Improvements to incentive mechanisms.
  • Firming up of organisational entity responsibility.
  • Better employing the role of policy financial institutions in servicing the real economy and servicing national policy.

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