Updated January 14th, 2024 at 19:17 IST
China regulator promises regulation 'with teeth and thorns' to defuse financial risk
China's financial regulator plans to increase punishment for financial crime
New Regulation: China's financial regulator plans to increase punishment for financial crimes and speed up the time it takes to prosecute them using regulation it calls "with teeth and thorns".
The National Financial Regulatory Administration (NFRA), established last year to oversee China's $57 trillion financial sector, said that the "approach would involve zero-tolerance for all illegal behaviour and a willingness to "punish the higher-ups, not just the subordinates".
The NFRA's vow of stricter regulation comes as national leaders attempt to revive the world's second-largest economy following its exit from three years of restrictive zero-COVID policies, while fending off potential financial risks from a prolonged property slump and 92 trillion yuan ($12.8 trillion) in local government debt.
Li Yunze, NFRA director, used the term "with teeth and thorns" last month in an interview with state news agency Xinhua to describe how the NFRA would implement the directions given during the Central Financial Work Conference, a key twice-a-decade financial policy meeting held last October.
The gathering, attended by Chinese President Xi Jinping and Premier Li Qiang, said China will guard against systemic risks, put all kinds of financial activities under supervision and set up a mechanism to resolve local debt risks and manage local government debt.
The NFRA further mentioned that the regulation and strict law enforcement will allow authorities to nip illegal activities in the bud and to catch small problems before they grow into a regional, or systemic risk.
"If law enforcement is not strict...illegal activities will be reinvented and banned repeatedly, and market chaos will continue to emerge in an endless stream, which may even lead to the phenomenon of 'bad money driving out good money', endangering financial order," it said.
(With Reuters Inputs)
Published January 14th, 2024 at 19:17 IST