China’s financial authorities are turning their attention to cross-market financial products and corporate governance as the next step of in its ongoing deleveraging drive, a Beijing official said on Friday, after having tackled the major issues facing the country’s banking and insurance industries.
“Next, we will move risk prevention and control into an even more prominent position (among policy priorities) and focus on a crackdown on problems such as poor governance and cross-market financial products,” said Chen Wenhui, Vice-chairman of the China Banking and Insurance Regulatory Commission, at the Caixin summit in Hong Kong
Ownership of financial firms and shadow banking will be two areas of focus, Chen added, criticising the existing practice of large corporations to gain a presence in multiple financial service businesses at the same time.
Chen told the audience that state policies designed to curb speculation and excessive borrowing have “started to curb disorders” in the financial sector. He referenced the fact that, whilst Chinese banks issued 12% more loans in this year’s first quarter relative to last year, total assets increased by just 7%, suggesting that lenders are putting more investments back on to the balance sheet to build liquidity reserves.