BEIJING - China plans to merge its banking and insurance regulators to tighten oversight and curb financial risks, in the biggest revamp of the financial sector since 2003.
It will also create new agencies to promote quality growth and better coordinate its foreign aid programmes.
The plans were among those announced on Tuesday (March 13) at the annual parliamentary session.
A key proposal is the formation of a new watchdog that will bolster oversight of financial institutions.
Once passed, the China Banking Regulatory Commission and the China Insurance Regulatory Commission will transfer policymaking functions, including drafting of key regulations and prudential supervision, to the People's Bank of China.
This will essentially give the central bank more regulatory powers.
"This move shows that China is moving towards a super regulator model. It will help curb regulatory arbitrage, a step towards deepening China's deleverage campaign," OCBC economist Tommy Xie told The Straits Times.
Regulatory loopholes such as the practice of banks authorising insurers to manage bank deposits for a guaranteed return could be plugged by the merger of the two regulators.
The new regulator will supervise both the banking and insurance industries, prevent financial risks and protect consumers' rights.
China's rapid debt build-up in recent years, especially in its state sector, has ignited fears of a financial crisis that could derail the world's second-biggest economy.
The government has listed curbing financial risks as one of the top priorities in the next three years.
State Councillor Wang Yong said the reform aims to solve the problems of "blurred lines of responsibilities, overlapping supervision and regulatory gaps" in the current system.
"We need to transform government functions and remove institutional barriers so that the market plays the decisive role in resource allocation and the government plays its role better," said Mr Wang.
Another significant change is the creation of a state market regulatory body to oversee competition, pricing as well as food and drug safety issues.
This comes as China strives to move up the value chain and be known as a producer of quality products.
The new bureau will "strengthen product quality safety supervision so as to give people peace of mind in whatever they buy, use and eat", said Mr Wang.
In a bid to push for innovation-led development, the Ministry of Science and Technology was also restructured. It will plan and implement innovation-related strategies at the national level and coordinate major research projects.
It will also promote reforms in the scientific and technology sector, and recruit foreign experts.
A new international development cooperation agency will take over foreign aid-related roles of the Ministry of Foreign Affairs and Ministry of Commerce.
"This will give full play to foreign aid as a key means of great power diplomacy... and better serve the building of the 'Belt and Road' (initiaitve)," said Mr Wang, referring to China's US$1 trillion (S$1.3 trillion) economic cooperation initiative.