The minds of China’s new regulators.docVIP

The minds of China?s new regulators Last month, China announced three new ministerial officials to head its financial regulatory agencies: Shang Fulin to the China Banking Regulatory Commission(CBRC), Guo Shuqing to the China Securities Regulatory Commission (CSRC) and Xiang Junbo to the China Insurance Regulatory Commission. These three positions are vital to the Chinese economy. The banking and the securities regulators govern trillions of US dollars in financial assets, whereas the total size of China?s insurance market in 2010 was “only”US$790 billion. The appointment of Guo and Shang, as well as the expected promotion to the Politburo Standing Committee of Wang Qishan, the vice premier in charge of economic and financial affairs, means that the financial “fire brigade” put in place by former Premier Zhu Rongji remains largely in place. As such, future policymaking in China?s financial sector should remain relatively consistent and perhaps even more autonomous from other parts of the state apparatus than it is currently. But what kind of policies can we expect? capitalism with chinese characteristics The published work of Shang Fulin and Guo Shuqing suggest that both remain staunch supporters of the state-dominated financial system that is the status quo. Of the two, Guo supports more innovation and diversification in financial products, although he does not advocate any fundamental overhaul of the financial system. Guo?s penchant for financial innovation is usually seen as positive. Within the framework of China?s repressed financial system, however, this stance has produced undesirable results. For example, Guo has favored using “multiple channels” to finance infrastructure projects, including municipal investment companies. Today, these investment companies are saddled with well over RMB10 trillion in debt. Shang Fulin, meanwhile, has been outspoken in his praise of market capitalism, but he too has failed to lead any dramatic reforms. Shang?