Veteran banker to head new financial regulatory body, improve oversight

Veteran banker Li Yunze was appointed Party secretary of the new national financial regulatory administration on Wednesday amid China's ongoing efforts to improve financial regulation and strengthen risk prevention.

Li, 52, was appointed vice-governor of Sichuan province in September 2018. Before holding the government position, he was vice-president of Industrial and Commercial Bank of China, the country's largest State-owned commercial lender. Before that, he worked at China Construction Bank, another large State-owned commercial lender, for 23 years.

Dong Ximiao, chief researcher at Merchants Union Consumer Finance Co, said Li's experience working at commercial banks and serving as a local government leader will help him better fulfill his financial regulatory responsibilities and strengthen coordination between financial regulatory policies and fiscal policies.

His experience will also help improve coordination between the central government's financial regulator and local governments regarding financial regulation.

"In recent years, China's financial industry has gone through a period of rapid development, accumulating certain financial risks, which have to some extent affected financial development and stability. … One reason for this is that China's segmented regulatory system is not compatible with the trend of comprehensive operation in the financial industry, and coordination between financial regulatory departments is insufficient," Dong said.

"Against the background of the increasingly clear trend of comprehensive operation in the financial industry and the continuous deepening of financial innovation, how to deepen the reform of the financial regulatory system and build a modern financial regulatory framework has become a major issue," he said.

The Government Work Report released in March listed effectively preventing and defusing major economic and financial risks as a key priority of the central government. The report stressed the need to see that all those involved assume their full responsibilities to guard against regional and systemic financial risks.

Zeng Gang, director of the Shanghai Institution for Finance & Development, said the reform of the financial administration system has laid a solid foundation for improving the efficiency of China's financial regulation and promoting the stable development of the financial industry.

"The main goal of this round of financial regulatory institutional reform is to further realize comprehensive regulation of various financial activities, improve the quality and effectiveness of financial regulation, effectively prevent and defuse financial risks, and firmly hold the bottom line of no systemic risks," Zeng said.

Lou Feipeng, a senior economist at Postal Savings Bank of China, said: "The new administration will be responsible for regulating the financial industry, except for the securities sector. This will help strengthen and improve the modern financial regulatory system and ensure that all types of financial activities are included in financial regulation.

"This will also reduce regulatory gaps, inconsistencies in regulatory standards and duplicated supervision caused by unclear regulatory responsibilities," Lou said.

Strengthening financial stability through scientific financial regulation will promote the high-quality development of the financial industry and better serve the development of the real economy, Lou said.