Can new ‘super regulator’ be superhero for China’s debt? – China’s latest business and technology news


Central bank governor Zhou Xiaochuan 周小川 last week described (in Chinese) what he sees as the “hidden, complex, sudden, contagious and hazardous” (呈现隐蔽性、复杂性、突发性、传染性、危害性 chéngxiàn yǐnbìxìng, fùzáxìng, tūfāxìng, chuánrǎnxìng, wēihàixìng) characteristics of many risks in the Chinese economy, especially debt, Bloomberg reports. How do authorities plan on dealing with these risks?

  • A new “super regulator” held its first meeting on November 8. Ma Kai 马凯, vice premier of the State Council, chairs the Financial Stability and Development Committee (FSDC), which will “review a strategic plan of financial reforms; coordinate China’s monetary policy and financial regulation; and forge policies on financial risk management so as to maintain the country’s financial stability,” Caixin says.
  • Being headed by a vice premier, the FSDC will have “a higher political ranking than a ministry” and “could help to reduce turf wars and infighting among regulators,” the SCMP reports, based on a Shanghai-based economist’s understanding. Collusion among mid-level regulators was found to hamper China’s recovery from a stock market crash in 2015, SCMP adds.
  • Liu He 刘鹤 is slated to lead the FSDC after Ma, as Liu was elevated to the Politburo at the 19th Party Congress, while Ma is set to retire, Bloomberg reports. A separate Bloomberg profile of Liu describes him as a Harvard-educated “brain” of supply-side reform in China, who is also the man who “many economists regard…as the voice behind an anonymous missive on debt published in the People’s Daily in May 2016.”
  • Despite the promising start, however, there are more doubts about the seriousness of financial reform at the top of China’s government. The New York Times points out (paywall) that “None of the current [regulatory] agencies disappeared, and the [FSDC] was merely assigned a small office in a corner of the central bank.”

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Lucas Niewenhuis

Lucas Niewenhuis is an associate editor at SupChina who helps curate daily news and produce the company’s newsletter, app, and website content. Previously, Lucas researched China-Africa relations at the Social Science Research Council and interned at the Council on Foreign Relations in New York. He has studied Chinese language and culture in Shanghai and Beijing, and is a graduate of the University of Michigan.