China's new bank regulator vows shadow banking crackdown

The newly appointed head of China's banking watchdog said today he would crackdown on real estate speculation and the country's shadow banking sector, promising an end to regulatory "chaos".
The primary mission of banks must be to "support the real economy", Guo Shuqing - who was appointed president of the China Banking Regulatory Commission (CBRC) three days ago - said at a high-profile press conference in Beijing.
"Commercial banks must... Tackle zombie companies, which are the crux of the problem, and actively explore ways to tackle debt problems," he said.
He was referring to heavily-indebted, overcapacity state- owned companies which survive on rolling credit from banks.

The loans come partly because of pressure from local governments, which fear social problems if such companies collapse and leave huge numbers of employees jobless.
Guo also warned of the dangers of real estate bubbles, pledging action against speculators.

The 60-year-old led the China Construction Bank for a decade and was the head of the Forex administration before becoming the governor of the eastern province of Shandong in 2013.
He said the CBRC was working on new rules to reduce risks in the booming asset management industry, tighten supervision of banks' risky wealth management products and curb the expansion of banks' off-balance sheet business.

"Banks, trusts, fund-management firms, brokerages and insurers all have asset-management operations, but because they have different regulators and are subject to different rules, there's been some chaos," he said.
"We're working on a joint regulation to set basic standards that every institution can follow."
He also said he aimed to target real estate bubbles, after an influx of low cost cash pushed real estate speculation to new heights.
The average price for a square meter of land jumped 49 per cent in southern Shenzhen province, and 38 per cent in eastern Nanjing last year. Real estate loans soared to 5 trillion yuans (72 billion USD) in 2016, representing some 45 per cent of total bank debt.

Guo said he would "strictly adhere to the principal of buying an apartment to live in, not to speculate on," without proposing concrete measures.
"I've been in place for three days! I will need to study the question," he added.