Show the Party the money
The Party is tightening its grip over the financial sector.
On Thursday, the central bank (PBoC) and the forex regulator (SAFE) published a joint readout of internal discussions centered around “studying the spirit” of the recently concluded Central Financial Work Conference (CFWC).
- On Wednesday, the securities regulator (CSRC) and financial regulator (NFRA) published their own reflections on the conference.
The readout echoed the CFWC’s call to strengthen Party control over the financial sector, pledging to:
- “Fully integrate Party leadership into all aspects and processes of the PBoC and SAFE.”
- “Utilize the Party’s political and institutional strengths to improve financial governance.”
Key financial policy goals include:
- Serving the real economy
- Stabilizing prices
- Promoting economic growth
- Expanding employment
Extra financing love will be shown to:
- Technological innovation
- Small private businesses
- Advanced manufacturing
- Green development
Our take: As with the CFWC itself, and the subsequent CSRC and NFRA readouts, this is mostly a regurgitation of long-standing policy goals.
- In other words, its more of a mission statement than a policy statement.
That said, one thing did catch our eye: Tackling deteriorating local balance sheets is now firmly on the agenda.
- “[We will] provide financial support for local government debt resolution and promote the establishment of a long-term mechanism for risk prevention and resolution.”
Get smart: Financial regulators have a lot on their plates, between dealing with legacy issues like local government debt and property distress while also transforming the financial system to support Beijing’s tech self-reliance goals.
- At the same time, they – and the financial sector more broadly – will be the subject of stricter ideological scrutiny and discipline inspections.
Our take: While these priorities aren’t necessarily in conflict, exacting political expectations could leave cadres apprehensive of screwing up, and thus quite cautious in advancing major policy changes.