News C-Suite07 Feb 2018

China:Sign given that anti-graft drive will be stepped up in financial sector

07 Feb 2018

In a rare move, a commentary in The People's Daily, the mouthpiece of the ruling Communist Party, has highlighted a series of shortcomings among China's financial regulators.

The article, titled “Financial Regulators Should Be Good Guardians,” said that regulatory officials' interests were often aligned with those of the regulated rather than the regulator, reported the financial publication Caixin. This weakened the integrity and effectiveness of the watchdogs in carrying out their mission.

The article is seen as a sign that Chinese authorities are stepping up their efforts to control risk and stamp out corruption in the financial industry. The People's Daily has in the past been used by China's authorities to convey strong messages to the country and to millions of government and party officials across the country.

The commentary called for a line to be drawn between regulators and those being regulated to prevent the inevitable unconscious softening of supervision. A “fire wall” needs to be built between regulators and the institutions they oversee, including preventing officials from going to work for the companies they previously supervised, to prevent corruption and moral hazard, it said.

“If regulation is really going to have teeth, we must dismantle the ‘revolving door’ between financial institutions and regulatory bodies, and prevent their interests from becoming entwined,” the commentary said. It also called for supervision to be more open and for regulatory power to be kept in the public eye which would result in more effective regulation and stop it being just a cat-and-mouse game between watchdogs and companies.

The Central Commission for Discipline Inspection (CCDI), the Communist Party's top anti-graft agency, signaled in January that banks will become the next target of the country’s sweeping anti-corruption campaign which began in 2012. The CCDI said it will focus on officials who have continued to engage in wrongdoing since the 18th Party Congress in November 2012, and step up scrutiny over “groups with vested interests that have intertwined political and economic ties”.

Mr Xu Jiaai, head of the disciplinary inspection unit at China's central bank, the People’s Bank of China, in an article posted last week on the website of the CCDI, said that while hidden risks in the financial sector require that institutional control systems be improved, in the final analysis, the fault lies with the people involved.

"Any selfish action for personal reasons in the work of the central bank is not just picking or stealing, but tearing at the fabric of our nation," Mr Xu said.

Several regulatory officials were punished last year for “negligent or inadequate performance of their professional duties exposed by major risk incidents,” the commentary said. At least four top-level securities, banking and insurance regulators have fallen since late 2015, including Zhang Yujun, assistant chairman of the China Securities Regulatory Commission; Yao Gang, assistant chairman of the CBRC; Yang Jiacai, vice chairman of the CBRC; and Xiang Junbo, the chairman of the CIRC and the first incumbent head of a financial watchdog to be removed as a result of a corruption investigation.


| Print | Share

Note that your comment may be edited or removed in the future, and that your comment may appear alongside the original article on websites other than this one.


Recent Comments

There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.

Other News

Follow Asia Insurance Review