China will strengthen the coordination of financial regulation, stabilise the property market, stamp out financial chaos and prevent systemic financial risks, according to a statement issued after a top political leadership meeting earlier this week.
"Financial disorder will be tackled thoroughly, financial coordination will be strengthened, and the efficiency and level of financial sectors supporting the real economy will be improved," said the statement released after a 24 July meeting of the Political Bureau of the Communist Party of China Central Committee, presided over by Mr Xi Jinping, General Secretary of the Central Committee of the Party who is also state President.
"The property market will be stabilised, the continuity and stability of policies will be maintained, and the establishment of the long-term mechanism (in managing the property market) will be accelerated," the statement said. "(China) will hold fast to the bottom line that no systemic financial risks should occur," the meeting said, according to Xinhua News Agency.
The meeting of the Politburo, which is a pinnacle group of around two dozen people who oversee the Communist Party, followed the 14-15 July national financial work conference, a key policymaking meeting held once every five years.
The government announced at the conference that the State Council, which is the Chinese cabinet, would set up a financial stability committee to oversee the work of the country's financial regulators including CIRC, the China Banking Regulatory Commission (CBRC) and the China Securities Regulatory Commission (CSRC).
Financial stability committee
The financial stability committee's office will be based at the central bank, the People's Bank of China, Xinhua News Agency reported. The committee's responsibilities include formulating development and reform plans for the financial sector, coordinating financial policies, ensuring regulatory cohesion, formulating rules to fill regulatory gaps, and holding regulators accountable when supervision is lacking, according to an official.
"Macro prudential management, coupled with prudent monetary policy will fundamentally ensure the real economy access to financial support and a stable run of the financial sector," the official said.
To this aim, China should unswervingly carry out prudent monetary policy, improve risk monitoring and early warning systems and shore up weak links in supervision, the official said.
In addition, the national conference announced that the People's Bank of China will take on a bigger role in managing financial market risk. In response, the central bank said it would carry out its duties and strengthen coordination on financial supervision.
The insurance regulator CIRC has said that it will work to defuse current risks and strictly contain new risks in the industry. Meanwhile, the CBRC vowed to regulate market chaos, including random leveraging and off-balance-sheet lending risks. The CSRC said it would promote the development of a multi-tier capital market system and encourage direct financing.