PRC Financial Regulator Priorities 2008
China's key financial authorities held several conferences in January to outline priorities and sound out major themes that will shape the regulatory landscape in the country's banking, securities, capital markets, insurance, foreign exchange, and futures sectors in 2008. Although many of the statements and terms that emerged from the conferences were vague, analysts have parsed these pronouncements for clues about the internal regulatory roadmaps for the new year.
China Banking Regulatory Commission (CBRC)
CBRC highlighted several 2008 priorities such as maintaining financial stability, improving supervisory responsibility, and fostering innovation. Specifically, CBRC aims to
- Strengthen the structure of the banking system and further improve supervision mechanisms;
- Intensify market access supervision to improve risk management;
- Reform and innovate technical measures for enhanced supervision and management; and
- Improve human resources utilization to create synergy from limited resources.
CBRC Chair Liu Mingkang's key points at the work conference (in Chinese)
China Securities Regulatory Commission (CSRC)
Echoing the key concepts that emerged from the 17th Chinese Communist Party (CCP) Congress and the Central Economic Work Conference, CSRC Chair Shang Fulin called for further reform and innovation in the securities sector, tightening market supervision and management, raising the quality of risk management, and better utilizing capital to meet China's economic development needs. In addition, CSRC aspires to raise the level of development, sophistication, and prestige of China's financial sector. CSRC's key priorities are to
- Attract high-profile and -quality companies to list on the stock exchange and explore opportunities for overseas red-chip and A-share listings;
- Develop corporate bond markets, including taking steps to increase corporate bond classes;
- Balance and solidify the current system's stability with support for innovation and competition;
- Improve regulatory and legal systems by supporting amendments to existing laws, such as the PRC Fund Law and Criminal Law, and by drafting new ones, such as the Regulations for Management and Supervision of Listed Companies and Regulations on Securities Companies' Risk Management; and
- Analyze and evaluate the opening of capital and futures markets to foreign participation, tighten the management of qualified foreign institutional investor quota and qualified domestic institutional investor supervision, and "strengthen the connection" of mainland and Hong Kong futures markets.
CSRC release on work conference (in Chinese)
China Insurance Regulatory Commission (CIRC)
CIRC's priorities, in line with last year's CCP congress, are intended to build on the State Council's 2006 circular, Selected Ideas on Reform and Development of the Insurance Industry. In the near term, CIRC aims to
- Improve the structure of the insurance market and insurance products and create preferential policies for certain regions;
- Improve supervision and management of solvency, corporate governance, market actions, and capital utilization to protect beneficiaries;
- Develop and promote agricultural, rural, low-premium, liability, and commercial pension and health insurance products;
- Improve internal company management and operating mechanisms and increase cooperation on international insurance supervision; and
- Enhance statistical and information-gathering systems, laws and regulations, research, consumer education, and insurance associations and organizations.
CIRC release on work conference (in Chinese)
People's Bank of China (PBOC)
PBOC's general priorities emphasize central government planning rather than market regulation. The central bank noted the importance of curbing inflationary economic growth and overheating and preventing sporadic price hikes. PBOC also plans to
- Promote reform that resolves inconsistencies within the nation's financial system;
- Speed up the adoption of measures to manage long-term financial stability;
- Employ innovative techniques to boost financial reform for commercial banking, rural credit policies, asset securitization, and in other sectors;
- Continue reforming the foreign exchange management system; and
- Raise the level of central bank functions through continued construction of financial infrastructure.
PBOC release on work conference (in Chinese)
State Administration of Foreign Exchange (SAFE)
At SAFE's national work conference on foreign exchange management, SAFE Administrator and PBOC Vice Governor Hu Xiaolian emphasized building on SAFE's current functions as a foreign exchange (forex) administrator that manages China's needs for forex at the institutional and individual level and expanding the functions in a balanced but development-oriented way. Hu laid out several priorities to advance SAFE's work:
- Innovate and reform the national forex management system and roll-out rules and regulations for administering united forex services trade;
- Actively develop China's forex market and related exchange services;
- Promote direct investment overseas by domestic enterprises and individuals, and bolster the qualified domestic institutional investor system;
- Reinforce supervision of financial institutions' forex business;
- Strengthen management of collection and settlement of forex for institutions, businesses, and individuals; and
- Intensify inspection of cross-border capital flows to safeguard against illegal forex trade and develop surveillance for banks' forex policies.
SAFE Summary of Administrator Hu Xiaolian's Address (in Chinese)