China's Regulator Urges Provinces to Develop Tailored Financial Risk Plans

04 Dec, 2023

China's Regulator Urges Provinces to Develop Tailored Financial Risk Plans

China's National Financial Regulatory Administration, led by Li Yunze, has advocated for provincial authorities to formulate individualized plans to address financial risks, emphasizing the need to avoid a uniform approach. This directive comes approximately a month after officials committed to establishing a mechanism to tackle local debt issues.

Li Yunze, in an interview cited by Xinhua News Agency, stressed the importance of enhanced financial risk management but underscored the necessity for customized policies tailored to the unique circumstances of each province. Provinces are urged to devise their own strategies for managing financial risks, moving away from a standardized solution.

As China, the world's second-largest economy, grapples with challenges this year, including a softer-than-expected recovery from Covid Zero policies and a lingering property crisis, there have been concerted efforts by central and local authorities to provide support. However, concerns have been raised about the concentration of government debt at the local level.

Li Yunze highlighted a province-specific policy approach for risk prevention and management, emphasizing the eternal significance of addressing financial risks. The National Financial Regulatory Administration intends to concentrate on investigating individuals causing major risks and deepen efforts to rectify market chaos and disruptive behavior.

In late October, the Central Financial Work Conference, attended by President Xi Jinping, pledged to optimize the debt structure of central and local governments. The commitment included establishing a process to resolve debt risks associated with local authorities.

Additionally, Li Yunze announced plans to create a mechanism for resolving consumption-related disputes and another for safeguarding consumers' rights, signaling a comprehensive approach to financial governance.

In a separate interview published on Saturday, People's Bank of China Governor Pan Gongsheng reiterated the central bank's commitment to controlling the monetary sluice, indicating a cautious stance on liquidity and money supply.