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Rare meeting among Chinese regulators could set bigger role for central bank

Reuters  |  BEIJING 

By Ryan Woo and Stella Qiu

(Reuters) - China's financial are gathering in in a once-in-five-years huddle that many expect will formalise a greater coordination role for the central bank, but will stop short of pushing changes that could potentially destabilise the

The National Financial Work Conference is strictly closed-door, but its outcome will be widely watched.

At the inaugural conference in 1997, set up China's insurance regulator. The second in 2002 saw the creation of the banking regulator. Investment Corp , the sovereign wealth fund, was formed after the 2007 conference.

The most recent meeting in 2012 yielded no significant policy change as the country's top leadership went through a once-in-a-decade transition, with Xi Jinping taking Hu Jintao's place as the leader of the People's Republic of

Ahead of the once-every-five years congress of the Communist Party in autumn this year, stability of the and society is key, with Xi expected to further consolidate his hold on power.

Economists say the meeting this weekend will likely focus on how the central can better coordinate with the Banking Regulatory Commission (CBRC), the Securities Regulatory Commission (CSRC) and Insurance Regulatory Commission (CIRC) to tackle weaknesses in the financial system.

A BROADER MANDATE?

"We can expect the People's of (PBOC) to be given more power to oversee and coordinate, given the growing amount of financial products that cross the boundaries of the three regulators," said Julian Evans-Pritchard, economist at Capital Economics.

"This shift is positive as the PBOC is probably the best placed to do this since it had the broadest mandate of ensuring financial stability."

PBOC, CBRC, CSRC and CIRC did not immediately respond to requests for comment.

Investors have long supported the idea of a unified body to oversee the various that oversee the different parts of the financial system, though there is little sign that a super-merger is imminent.

In 2015, a poorly coordinated response to China's stock market crash not only did not help end the bloodshed, the government's competence came under scrutiny. Premier Li Keqiang openly criticised for not responding sufficiently.

In March this year, CBRC's new chief Guo Shuqing said the banking regulator is collaborating with other to create a framework to close loopholes in rules for cross-market financial products.

"Different regulators, different laws, different rules have caused some chaos," Guo said.

CURRENT RISKS

Economists expect the meeting this weekend to set the tone of future financial regulations, but warn against expectations for major shifts in policy.

"The core of the meeting is to defuse current risks, and the defusing itself shouldn't cause any systemic and regional risks," said Zhang Ming, chief economist at Ping An Securities.

China's top leadership has identified curtailing financial risks as a top priority this year after a sharp rise in overall leverage.

The conference is expected to tackle China's $7.7 trillion shadow banking sector. The loosely regulated industry includes non-forms of credit such as trusts and wealth management products (WMPs).

Earlier this year, PBOC included banks' off-the-balance-sheet WMPs in its examination of broad credit in its Macro Prudential Assessment (MPA) for the first time, to give authorities a better sense of potential risks to the financial system.

Economist also say that further opening up China's financial sector will be on the meeting's agenda.

(Reporting by Ryan Woo and Stella Qiu; Additional reporting by Coco Li; Editing by Richard Borsuk)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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