CCP Reins in Chinese Central Bank Independence


The Chinese Communist Party (CCP) has sought to reiterate its control of the People’s Bank of China (PBOC) during the latest round of sweeping inspections of the country’s financial institutions and regulatory bodies.

Discipline inspectors from the CCP’s top anticorruption authority have conducted inspections of PBOC in recent weeks, during which they reiterated the official position that the Chinese central bank is subject to stringent party control, according to sources speaking to the Wall Street Journal.

The inspections are part of a sweeping review of the Chinese financial sector by CCP officials, covering around 25 different institutions.

Sources say a key focal point of the inspections is whether state-backed financial institutions or even regulatory authorities have cultivated excessively close ties with private companies, leading to negligence in containing the risk issues of giants such as fintech platform Ant Group, and beleaguered real estate developer Evergrande Group.

PBOC also recently announced a cut to the reserve ratio for Chinese financial institutions, in a move which some analysts say is a sign of its diminished independence, as it stands contrary to prior guidance.

Last Friday Premier Li Keqiang told International Monetary Fund managing director Kristalina Georgieva that China would cut its reserve requirement ratio. Several days later PBOC announced that the reserve ratio would be cut by 0.5 percentage points starting from 15 December.