FOR ordinary Chinese investors, painful memories of the summer’s stockmarket meltdown are fading away, soothed by a fresh rally in share prices. But for the government, the fallout is just getting started. In recent weeks it has launched investigations into officials, bankers and hedge-fund managers suspected of illegal trading. It has tightened rules about using debt to buy shares. Now it is planning the biggest overhaul of Chinese financial regulation in more than a decade.
The idea is to create a “super-regulator”, combining three separate agencies and, possibly, the central bank into a single, powerful entity responsible for monitoring all financial firms: banks, insurers, brokerages, asset managers and so on. Consolidation has been mooted before, only for the system to remain unchanged. But according to people familiar with government discussions, big changes are virtually certain this time because of the stockmarket debacle.
China assembled its regulatory framework in piecemeal fashion in the 1990s and early 2000s as the financial system took shape. Different agencies look after banks, brokerages and insurers, whereas the central...Continue reading
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