China consolidates control in its financial sector with CFC’s establishment
The creation of the Central Financial Commission shows Xi Jinping’s aim to reassert the party’s dominance over state and society alike
Beijing — China’s Central Financial Commission (CFC), a new regulator with Premier Li Qiang as its head, held a meeting on Monday and urged stronger supervision of risks in the financial sector as Beijing accelerates efforts to become a “major financial power”.
The setting up of the CFC underscores how the ruling Chinese Communist Party is tightening grip on the country’s $61-trillion financial sector amid a destabilising property and local government debt crisis that has weighed on the economic growth.
Here are the key facts we know about the commission:
What are the responsibilities of the CFC?
In March, China announced the creation of the CFC to boost the party’s oversight over the country's financial industry, as part of a broader reorganisation of government and party institutions.
The CFC was set up for the top-level design, development and supervision of the financial sector, strengthening “unified leadership on financial work”, according to a restructuring plan published by state media in March.
At a recent CFC meeting led by Premier Li, plans were approved regarding the division of responsibilities to promote high-quality financial sector development, though specifics were not provided, according to state media reports on Monday.
This was the first time state media referred to Li by his new title as head of the CFC.
The body also aims to accelerate policy research and drafting in areas such as financial technology, green finance, inclusive finance, pensions, and digital finance.
The CFC has recruited many officials from the central bank and the finance ministry, financial news outlet Caixin reported earlier this month.
Who are the other top officials at the CFC?
Li's appointment comes after state media disclosed earlier in November that Chinese Vice-Premier He Lifeng had been appointed head of the office of the CFC, which is responsible for running the day-to-day affairs of the new regulator.
The appointments indicate that both officials, who are close confidants of President Xi Jinping, will play important roles in shaping China's financial policies.
He was also appointed as party chief of a separate Central Financial Work Commission (CFWC), which has been set up to strengthen the ideological and political role of the party in China's overall financial system.
Wang Jiang, a former chair of state-owned conglomerate China Everbright Group, has been named as deputy party chief of the CFWC. Xia Xiande, a former vice finance minister, was appointed as deputy head of the office of the CFC.
Why is setting up the CFC significant?
Analysts said the creation of the CFC showed Xi’s aim to reassert the party’s dominance over state and society alike, as the line between the party and the government has become increasingly blurred.
At a key twice-a-decade financial policy meeting that was held last month, China vowed to uphold the centralised and unified leadership of the Communist Party on financial work, strengthening efforts to reduce local debt risks.
Adding to the signs of Beijing’s consolidated control over financial affairs, Xi made his first known visit in October to the central bank since he became president a decade ago, Reuters reported.
Earlier in 2023, China also set up a new major government financial regulator, the National Financial Regulatory Administration (NFRA), a body set up under the State Council, which is also led by Li.
The People¹s Bank of China has already seen its regulatory powers being eroded by the regulatory overhaul, a change that will allow the central bank to focus on conducting monetary policy and macro-prudential supervision.
The setting up of the CFC also comes against the backdrop of Beijing in recent months stepping up a crackdown on corruption in the financial sector, nabbing many senior officials including a former deputy central bank governor.
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