Current Challenges Facing Chinese Financial Supervision and Methods of Handling These Challenges

Abstract

This paper presents the main challenges currently facing China's financial supervisory authority and the supervisory response to these challenges, focusing on the shadow banking system and Digital Finance. The author seeks to find out what reforms were introduced and what tools were applied in the realm of supervision in the recent period, what results they have yielded and whether any further reform is necessary to improve the efficiency of Chinese financial supervision, and if so, in what area(s). This paper focuses on the activities and toolset of the CBRC, the main financial supervisory body, and also covers the relevant tasks discharged by the PBC.

China in Search of Equilibrium – Transition Dilemmas of Growth and Stability

“…The previously permissive attitude toward shadow banking activity was replaced by increasing tightening. The banking regulatory commission formulated additional new rules first in respect of the asset management products, and later in respect of entrusted loans (Varga 2017); however, a spectacular result was only achieved after the new leader, Guo Shuqing took office in February 2017. This segment shrank substantially after the introduction of the new regulations, which is an extremely important and positive development in terms of preventing the further accumulation of risks.…”