Shakeup of the Financial Regulatory System
According to the State Council’s institutional reform plan announced March 13, 2008, the 15-year-old financial supervision model that consists of “one bank and three commissions” will be replaced by a new structure wherein “one bank and two commissions,” namely the People’s Bank of China, the China Securities Regulatory Commission, and the China Banking and Insurance Regulatory Commission, will be under the jurisdiction of the Financial Stability Board.
Under the new system, the functional division in financial supervision, the integration of departments, and the personnel adjustments are the focus of the reform. With the optimization of the regulatory system, the rapidly developing financial markets and individual mixed-industry and cross-border financial businesses will have to go back to the basics.
Anti-graft System Up for Major Changes
The director of the National Supervisory Committee is to be elected March 18, 2018, and the Committee will soon start to operate. At that point, the supervisory committees will be established at four levels, namely the national, the provincial, the municipal, and the county-levels, and will take on the responsibility of combating corruption in accordance with the duties, jurisdiction, and investigative methods granted by the supervisory law. “Shuanggui,” which was replaced by “detention,” will become history.
At present, China has various supervision, anti-corruption, and inspection agencies at different levels to conduct investigations into violations of discipline and law as well as duty-related crimes. The institutions are so dispersed that they increase the cost of investigation and make it difficult to form a concerted effort to effectively curb corruption and abuses of power.
Zhou Xiaochuan’s 15 Years As Governor of PBoC
Zhou Xiaochuan, the 70-year-old outgoing governor of the People’s Bank of China (PBoC), had been in charge of the central bank for 15 years. Under Zhou’s leadership, the PBoC took an independent path of financial reform and opening-up that has Chinese characteristics while keeping with international standards.
During Zhou’s term, he pushed forward various financial reforms including the marketization of interest rates, capital account convertibility, the internationalization of the RMB, the reform of the RMB’s exchange rate mechanism, the reform of the financial market, the state-owned banks’ stock system reform and listing, policy-based financial reform, rural financial reform, and the establishment of the deposit insurance system. He also played a key role in the yuan’s inclusion in the SDR currency basket in 2015.
Stiglitz: A Quiet Trade War is Expected
The Trump administration is pondering on various measures to impose tariffs on a range of products from China. Joseph E. Stiglitz, Nobel Prize winner in economics, is one of the few people who understands Sino-American trade, globalization, and China’s reforms. Stiglitz accepted an exclusive interview by Caijing on March 13, 2018.
Stiglitz argues that Trump is a new problem for every country in the world. Other new problems, including anti-globalization, artificial intelligence, and de-industrialization, are also coming into view. China will not start a trade war, but if Trump does, China will fight back. “It’s a quiet trade war. But without bullets,” Stiglitz said.
Chinese Blockchain Companies Go Abroad
Domestic blockchain companies have rushed to go abroad after the Chinese government explicitly banned financing through issuance of tokens including initial coin offerings (ICOs) in September 2017. These companies are trying to find a new continent that allows them to operate above board.
The wave to go out consists of three currents: firstly, a small group of companies hoping to set up exchanges flock to Japan and other countries to compete for trading licenses; secondly, most companies that want to raise funds through ICOs are setting up foundations in countries such as Singapore and Switzerland in order to obtain qualifications for legitimate coin issuance; thirdly, some more powerful companies are trying to move their teams abroad. However, as more and more countries tighten supervision, Chinese blockchain companies that want to go abroad face greater uncertainty.