Xi's Crackdown on Financial Risks and Accountability
China's President Xi Jinping is tightening the screws on financial regulators and local government officials, demanding greater accountability in preventing and defusing risks to the country's financial system.
In a high stakes meeting of the Politburo on Monday, Xi presided over the review of new rules that aim to strengthen the Communist Party's leadership in the financial sector. The new provisions, though light on details, will hold officials at all levels responsible for establishing the "correct views" on political performance when it comes to financial supervision and risk control.
The official Xinhua News Agency reported that Xi stressed the importance of these accountability measures, intended to ensure financial regulations "have teeth." The move sends a powerful signal that Beijing will not tolerate lapses when it comes to safeguarding financial stability – a top priority for Xi.
China's policymakers have been sounding the alarm on lingering financial risks, pledging deeper reforms at the annual legislative meeting in March. Premier Li Qiang cited potential dangers stemming from the property sector downturn, mounting local government debt, and vulnerabilities in smaller financial institutions.
Under Xi's leadership, Beijing has made concerted efforts to curb excessive risk-taking, reining in housing speculation, shadow banking, and years of debt-fuelled growth. However, the challenges remain formidable as the world's second-largest economy navigates pandemic shocks and structural shifts.
Monday's Politburo meeting also reviewed measures to spur development in six central provinces, including Shanxi, Anhui, and Henan. These regions, though rich in resources, have lagged in economic growth and face significant financial strains.
Xi's push for accountability underscores the necessity of overhauling China's financial system and curbing systemic risks. As the president doubles down on his vision of "Chinese-style modernisation," officials at all levels will face intensifying pressure to fall in line and deliver on the leadership's policy priorities. With firm resolve and the right reforms, China is well-positioned to build a robust and resilient financial sector that can power its economy into the future.
If you would like to receive The Daily Update to your inbox, please email markets@epicip.com or click the link below.