(Bloomberg) -- China will improve its supervision mechanism for the $66 trillion financial sector and regulate all sorts of financial activities, according to the ruling Communist Party’s long-term plan for the world’s second-largest economy.
The government will formulate financial law to strengthen regulatory responsibilities and accountability, according to a document published by the official Xinhua News Agency on Sunday.
Chinese regulators will also support qualified foreign-funded institutions to participate in financial business pilot projects and optimize the system for qualified overseas investors, it added.
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China has tightened its grip on the finance industry in recent years with President Xi Jinping’s “common prosperity” campaign, triggering belt-tightening across the board. An anti-graft drive also brought down more than 100 financial officials and executives last year alone.
Indications are growing that Xi is shifting away from four decades of market-oriented reforms and financial innovation. He has emphasized the Communist Party’s “centralized and unified leadership” of the sector and pledged to build “a modern financial system with Chinese characteristics” that’s completely different from the West.
Xi’s economic slogan for pursuing “high-quality development” also signaled a desire to avoid another bout of unsustainable debt-fueled growth, potentially squeezing profits at the financial sector.
China overhauled its regulatory regime early last year to create a new authority, the National Financial Regulatory Administration, to oversee all financial sectors except the securities industry. The regulator had vowed to crack down on all illegal financial activities and beef up market oversight.
Authorities had also taken aim at the nation’s bankers, asking them to clean up their “hedonistic” lifestyles and abandon pretensions of being the “financial elite.” The top graft buster kicked off a new round of inspections in April at key financial regulators as well as big state banks to curb corruption among party cadres and corporate executives.
--With assistance from Tian Ying.
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