China Plans to Establish Central Financial Commission to Regulate Financial Sector:
- Beijing is looking to set up a Central Financial Commission to oversee and regulate its $61 trillion financial sector.
- The commission will act as a watchdog and decision-maker, with the aim of addressing China’s economic troubles.
- The move will place President Xi Jinping and the Communist Party (CCP) at the forefront of the country’s financial sector, weakening established government groups such as the People’s Bank of China and the China Securities Regulatory Commission.
- The CCP will have extended control over the sector, allowing them to deleverage the real estate sector, support indebted local governments, and crack down on speculation and corruption.
- The establishment of the commission is in line with the CCP’s focus on national security and party control, as China seeks to de-westernize its economy and extend its influence.
China’s Financial Woes:
China has been grappling with a range of financial issues, including a lack of rebound from the pandemic, unemployment among young workers, declining exports, and sanctions on its tech sector.
However, the biggest challenge lies in the real estate industry. Formerly a booming sector and a major job creator, it has been in disarray since Beijing imposed borrowing limits on real estate firms.
As a result, new home prices are falling, there is a surplus of vacant apartments, and major developers such as Evergrande and Country Garden are burdened with significant debt.
A Focus on Party Control:
President Xi Jinping and the CCP have been increasingly focused on national security and party control, diverting attention from economic concerns.
China has been cracking down on foreign businesses and accusations of Western countries trying to steal sensitive information from Chinese companies have been made.
The establishment of a national financial commission is a move to further de-westernize China’s economy and consolidate the CCP’s influence.
Hot Take:
China’s plan to establish a Central Financial Commission reflects President Xi Jinping and the Communist Party’s desire for greater control over the country’s financial sector. By weakening established government groups and placing themselves at the forefront, they aim to address China’s economic troubles and exert more influence over major business deals. However, this move also indicates a shift towards greater party control and a de-westernization of China’s economy. It remains to be seen how this restructuring will impact the future of China’s financial sector and its global standing.