China's new financial gatekeeper Li Yunze strikes an optimistic note, vowing to wipe out 'blind spots' to protect economy from risks
The gatekeeper of China's banking and insurance industries struck an optimistic note in his first major public speech, pledging to eliminate regulatory blind spots to make the 400 trillion yuan (US$56.2 trillion) sector more conducive to global capital.
The growth trend of China's economy remains fundamentally intact, and there is "no change in China's role as the main driver of global growth, from which we get our biggest backing to prevent and defuse financial risks," said Li Yunze, head of the National Financial Regulatory Administration (NFRA), during the Lujiazui Forum in Shanghai. "China's financial industry is operating steadily and any risk is generally controllable. We have full confidence and the capability to hold onto the bottom line [in avoiding] any systemic financial risk."
Li's positive note came as global corporate executives including Citigroup's chief executive Jane Fraser, Tesla's CEO Elon Musk, Apple's CEO Tim Cook have made a beeline for China in the months following the country's emergence from Covid-19 lockdown.
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The core objective of financial regulation is to prevent any systemic risks from the banking, insurance or securities industries from hurting the underlying economy or pushing the growth trend off track, Li said. In this regard, the regulator will spur banks to increase their credit support to revive domestic demand, especially in so-called green consumer finance such as the purchase of electric vehicles and green household appliances.
Li Yunze, member of Sichuan party committee, Deputy Sichuan governor. Photo: Sina.cn alt=Li Yunze, member of Sichuan party committee, Deputy Sichuan governor. Photo: Sina.cn>
Advanced manufacturing, emerging industries earmarked for strategic importance, and upgrades to traditional sectors will also get regulatory support, Li said at the start of the two-day conference in China's commercial hub. The regulator will guarantee financing of investments in housing redevelopment in mega cities and infrastructure projects, he said.
Policymakers are grappling with the prospects of stumbling growth, as the world's second-largest economy struggles to revive production and fill jobs after three years of draconian anti-Covid policies. Revenge spending has failed to materialise after a brief spurt of activity, as rising unemployment forced many households and fresh graduates to postpone big-ticket purchases.
China's latest trade data painted a sombre picture. Exports shrank by a staggering 7.5 per cent in May from the same month last year when Shanghai was in the middle of a citywide lockdown. A government report due on Friday is expected to show producer deflation worsened.
China would strive to make pre-emptive measures to nip any new financial risk in the bud and contain its spread, Li said. While the recent woes on the global banking industry from the collapse of the regional banks in the US and the downfall of Swiss investment bank Credit Suisse Group had a "marginal impact" on China, the nation's financial industry still needed to be vigilant and draw lessons from it, he said.
Li also assured foreign investors that China would further open up its financial industry, reiterating that the nation will stick to its opening-up policy that was first introduced in the 1980s.
Li, who turns 53 in September, has been in the spotlight after his May 19 appointment to head the NFRA, the enlarged financial regulator overseeing the nation's banks, insurers and financial holding companies like Ant Group.
A career banker, Li was one of the vice governors of Sichuan province before his appointment to NFRA. He was one of the vice-presidents of the Industrial and Commercial Bank of China (ICBC) and held various positions at China Construction Bank.
As part of the sweeping overhaul of the government organizations endorsed at the annual legislative meeting in March, the NFRA was created to take over the responsibility of oversight of financial conglomerates from the central bank and has also absorbed the regulatory job of the banking and insurance watchdog.
Li pledged to prioritise the prevention of financial risks as one of the new regulator's main tasks during his inauguration, signalling the significance of financial stability to the economy. The downturn in the property market and a high debt-to-income ratio at local governments are highlighted by economists as hazards that would potentially destabilise China's financial system.
This year's theme at the Lujiazui financial forum is about global financial opening and collaboration as the engine driving economic recoveries. Participants include bankers from JPMorgan Chase and Goldman Sachs. The annual event was called off last year because of the pandemic, its first cancellation since 2009.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.
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