◎ Xi is focusing his efforts on rooting out corruption in the financial sector to prevent his political opponents from undermining his administration by creating or magnifying financial risk in China’s economy and markets.
China’s State Council debuted the Financial Stability and Development Committee (FSDC) on Nov. 8. During the new financial regulator’s first meeting, which was chaired by FSDC head and Chinese vice premier Ma Kai, discussions revolved around financial risk and not development.
- Xi Jinping announced the establishment of the FSDC to strengthen financial oversight and guard against risks during the National Financial Work Conference in July.
- Many observers speculated that the People’s Bank of China chief would head the FSDC because the central bank has a regulatory body and earlier official statements on the FSDC noted that its office would be based in the central bank building.
But with a vice premier in charge of the FSDC means that it is above China’s other financial oversight bodies.
Why it matters:
- The 2015 China financial crisis exposed the shortcomings of the four financial oversight bodies—the People’s Bank of China, the China Banking Regulatory Commission, the China Securities Regulatory Commission and the China Insurance Regulatory Commission—in regulating risk and rescuing the markets.
- The Chinese authorities also later discovered that “moles” inside the financial regulators had collaborated with power officials and money launders to short the stock market in 2015.
- The FSDC was hence established to supervise the existing financial oversight bodies and hold them accountable in the event of financial mischief.
- Xi Jinping is focusing his efforts on rooting out corruption in the financial sector to prevent his political opponents from undermining his administration by creating or magnifying financial risk in China’s economy and markets.
- Liu He, a new Politburo member and Central Financial Work Leading Group Office director, is favorite to replace Ma Kai as head of the FSDC during the Two Sessions political conclave in March 2018.