Beijing mulls over merger of banking, insurance regulators

BEIJING • China is considering a merger of its banking and insurance regulators, people familiar with the matter said, as it seeks to better coordinate its attempts to counter financial risks in the world's second-largest economy.

Government agencies under the direction of a Communist Party central reform group led by President Xi Jinping are drafting a plan that would combine the China Banking Regulatory Commission (CBRC) and the China Insurance Regulatory Commission under a single head, the people said, asking not to be named because they are not authorised to discuss the matter publicly.

The possible regulatory shake-up suggests that China's leadership wants to streamline its campaign to deleverage the economy, a top priority as Mr Xi began his second five-year term last year.

Both banks and insurance companies have been involved in the rapid growth of China's shadow banking sector, another key focus of the regulatory clampdown.

The plan, which is under discussion and may yet still change, could be announced after the National People's Congress begins its annual session on March 5, two of the people said.

Alternative plans that have been discussed include creating a "super-regulator" that also includes the central bank and stock market watchdog, as well as giving the People's Bank of China greater oversight over the other three main regulatory bodies.

Last year, Mr Xi announced the creation of a new Financial Stability and Development Committee to improve coordination among different government agencies as economy-wide debt approaches 260 per cent of output.

Mr Liu He, a key economic adviser to Mr Xi, may soon head the body.

Any move to combine China's insurance and banking regulators would be aimed at improving the efficiency of the financial reform process, said Mr Tommy Xie, an economist at OCBC Bank in Singapore. "The move could effectively reduce regulatory arbitrage and clear the grey areas in the financial markets," he said.

After his appointment last year as CBRC chairman, Mr Guo Shuqing has embarked on a campaign to root out malpractice in the banking industry, improve implementation of lending policies and curb cross-holdings of financial products.

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A version of this article appeared in the print edition of The Straits Times on January 27, 2018, with the headline 'Beijing mulls over merger of banking, insurance regulators'. Print Edition | Subscribe