The head of China’s Banking and Insurance Regulatory Commission (CBIRC), Guo Shuqing, has said the country’s ongoing deleveraging drive must be in proportion to what the market can handle, as the economy showed signs of cooling last month.
As Caixin reports, Guo also stressed that financial institutions’ trust in a government bailout must end, putting an end to what has for years been Beijing’s policy towards heavily-indebted banks.
“The crackdown on interconnected businesses and the recycling [of money] within the financial sector must fully consider the ability of institutions and the market to withstand [deleveraging pressure],” said Guo.
After a series of debt defaults from large or state-linked entities in recent months, questions have been raised as to whether Beijing will step in to absorb any further troubles in the financial system. Guo, conversely, said that the goal should be to “establish and improve a mechanism in which enterprises, banks and governments share responsibilities and losses.”
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