Beijing plans new policies on financial discipline

BEIJING: China plans to impose new measures to tighten financial discipline, prevent major risks and improve its financial structure in support of steady economic development, according to the central bank governor and financial regulators.

Their articles, included in a recently published book, highlight key tasks for the next five years, such as the government’s increased scrutiny of the financial sector to tackle credit defaults, curbing misconduct and encouraging financing through the equity market, experts said.

The country is building a broad regulatory framework that covers all financing activities, from traditional bank lending to off-budget debt financing including the Internet giants that provide financial services.

Fintech businesses should follow some new and special regulatory rules, Guo Shuqing, Party secretary of the People’s Bank of China, the central bank, wrote in an article.

Guo, who is also chairman of the China Banking and Insurance Regulatory Commission, stressed the importance of an adequate capital base and an appropriate leverage ratio when undertaking financial innovation.

He warned that real estate is a major threat for the country’s financial sector since real estate-related loans accounted for 39% of all banking loans.

Policy watchers noticed that the authorities are concerned about the country’s financial health following some cases of corporate bond defaults amid Covid-19 shocks. The total debt-to-GDP ratio also increased after policymakers introduced monetary and fiscal stimulus in the first two quarters to stabilise economic growth. — China Daily/ANN

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