A meeting of one of China’s top financial authorities chaired by President Xi Jinping has stressed ongoing measures to prevent the onset of systemic risk in the Chinese finance sector.
At a meeting convened on 17 August, the Central Financial and Economic Affairs Commission (CFEAC) of the Chinese Communist Party (CCP) heard reports from leading financial regulators on the prevention and dissolution of financial risk.
These regulators included the Chinese central bank, the China Banking and Insurance Regulatory Commission (CBIRC) and the China Securities Regulatory Commission (CSRC), as well as the National Development and Reform Commission (NDRC) and the Ministry of Finance (MOF), highlighting their key role in ongoing risk prevention efforts.
The meeting called for:
- Shoring up the foundations of financial stability,
- Effectively handling the relationship between stable growth and risk prevention,
- Consolidating the positive trend of economic recovery,
- Using high-quality economic growth to dissolve systemic financial risk and
- Preventing the triggering of ancillary financial risk during the process of disposing of risk in other areas.
CFEAC is a commission of the Central Committee of the Chinese Communist Party (CCP), and is responsible for supervising the economic work of both the CCP and China’s State Council.
Domestic observers point out that subtle changes in the wording of CFEAC’s latest official statement point to a potential shift in policy focal points.
While Chinese regulators have generally called for “preventing the onset of risk during the disposal of risk,” making reference to the financial sector alone, the latest statement calls for “preventing the triggering of ancillary financial risk during the process of disposing of risk in other areas,” highlighting risk disposal in other sectors of the economy.
Recent official statements on risk prevention have stressed five key work items including:
- Effectively stabilising the macro-leverage ratio, controlling credit risk in key areas.
- Steadily dissolving shadow banking risk.
- Orderly disposal of the risk of various types of high-risk financial institutions.
- Comprehensive clean up and rectification of the financial order.
- Deepening of financial sector reform and opening, strengthening of he regulation of expectations and guidance of public opinion, and pragmatic prevention of irregular financial market volatility and risk of external shock.