China will establish a new federal financial regulatory body to replace its current banking and insurance watchdog, following plans for developing a national data bureau unveiled recently.
The legislature may vote on reforms soon
According to the proposal for financial regulation made to the Chinese parliament at its annual session, the State Council would oversee the industry, except for the securities sector.
The China Banking and Insurance Regulatory Commission {CBIRC} would no longer exist under the new system. Its responsibilities and those of the central bank and securities regulators will transfer to the new administration.
The number of employees at central-level state institutions will reduce by 5% due to a more significant government overhaul.
Winston Ma, an adjunct professor at the law department at New York University, said that overhauling the financial regulatory system “reflects the new focus on ‘dual circulation’ – both domestic and global circulation of the economy – and ‘uniform national markets.”
Currently, the People’s Bank of China {PBOC}, the China Banking and Insurance Regulatory Commission {CBIRC}, and the China Securities Regulatory Commission {CSRC} are in charge of overseeing China’s financial sector, with the Financial Stability and Development Committee of the cabinet having overall authority.
According to the proposal, the new administration will “strengthen institutional monitoring, supervision of behaviors, and supervision of functions.”
Li Nan, a professor of finance at Shanghai Jiaotong University, suggests the CBIRC’s current structure combines the duties that the Office of the Comptroller of the Currency {OCC} and the Federal Deposit Insurance Corp {FDIC} in the United States, performing on a similar scale.
The central bank also plays a regulatory role in this arrangement.
President Xi Jinping reiterated his need for comprehensive reforms to party and government institutions last week. At the party conference in October, Xi officially cemented his position as China’s most powerful leader since Mao Zedong by winning a record-breaking third leadership term.
The control system of data
In addition, the Chinese government would establish a bureau to coordinate the development and distribution of data resources, according to a plan presented to parliament.
The National Development and Reform Commission {NDRC}, a potent state planner, would oversee the proposed agency, which will take over part of the duties currently carried out by the Office of the Central Cyberspace Affairs Commission, which regulates the Chinese internet.
The new bureau’s duties will include promoting smart cities and exchanging information resources across industries.
China has tightened control over data in recent years because of concerns that unregulated gathering by private companies could enable competitor states to use the information on infrastructure and other national interests as a weapon and the perception that data has become a valuable economic resource.
According to a major Chinese IT company source, the bureau’s primary responsibility would be to develop the data market. Organizations like the Cyberspace Administration of China would continue to handle regulatory duties.
