China announced plans to merge regulators responsible for US$43 trillion of financial assets, creating a new body with enhanced oversight of its banking and insurance industries.
The China Insurance Regulatory Commission (CIRC), established in 1998 and overseeing 17 trillion yuan (US$2.69 trillion) of insurance assets, is to be merged with the China Banking Regulatory Commission (CBRC), which supervises more than 4,000 banks with US$40 trillion in assets, according to a Chinese State Council reform plan submitted yesterday to the annual session of the Chinese National People’s Congress.
It is the biggest overhaul in the regulation of the industry since the creation of the CBRC in 2003.
The new entity is to be central to Chinese President Xi Jinping’s (習近平) campaign to curb risks in China’s financial sector, which culminated last month in the unprecedented government takeover of Anbang Insurance Group Co (安邦保險集團).
With the stage now set for Xi to rule beyond 2023, his policy of reducing debt — which stands at about 260 percent of output — might extend over a longer time horizon.
At the same time, the combined banking and insurance regulator is losing some powers to the People’s Bank of China, another sign of the growing regulatory power of the country’s central bank.
Certain CBRC and CIRC functions, including drafting key regulations and prudential oversight, are to be moved to the central bank, the proposal said.
“Finance is core to a modern economy and we must pay high attention to prevent financial risks and safeguard national financial security,” the proposal said, adding that it is intended to fix any overlaps in regulatory oversight.
China in July last year announced the creation of the Financial Stability and Development Committee, and since then watchdogs overseeing banks, insurers and the stock market have intensified efforts to clamp down on shadow financing and other perceived risks.
The regulators have focused on curbing the growth of wealth management products, trust products and interbank liabilities, which fuel a vast parallel financing industry in China.
Other signs of the growing power of the central bank include its adoption of a so-called macro-prudential assessment framework to better gauge risks in the entire financial system, as well as the health of individual institutions.
Off-balance sheet wealth management products and other shadow banking activities were later included in the assessment.
The CBRC under Chairman Guo Shuqing (郭樹清) has also shown its teeth by slapping a record number of punishments on financial institutions for offenses, including concealing the true extent of their bad loans.
On the other hand, the CIRC’s chairmanship has been vacant since its former head, Xiang Junbo (項俊波), was removed in April last year amid a corruption probe.
Some insurers, including Anbang, boosted sales by selling high-yield, short-term products in the past few years and used the proceeds to fund a buying spree in listed companies and overseas trophy assets.
That prompted the nation’s top securities regulator to slam those using leverage to acquire shares as “robbers.”
Since 2016, the CIRC has tightened scrutiny on short-term products and restricted acquisitions by insurers.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts