Committee to coordinate fiscal policies

Specific path new regulator will take is still being worked out by officials.

The newly established national financial regulatory body is designed to be the top-level executor and coordinator of the State Council's macroeconomic policies rather than to only safeguard the inflated financial sector, according to experts directly involved in the committee's preparatory work.

The priority task of the Financial Stability and Development Committee, which debuted earlier this month with Vice-Premier Ma Kai as the head, is to effectively implement and coordinate economic and financial policy decisions made by the State Council, Chen Daofu, deputy director of the Research Institute of Finance under the State Council's Development Research Center, told China Daily in an exclusive interview.

Chen's institute has submitted a report to the State Council suggesting a feasible plan for the committee's specific responsibilities and organizational structure.

Coordinating and synergizing the country's fiscal and monetary policies with its key medium- to long-term industry-development plans will be another important function for the committee, Chen said.

Wang Gang, deputy head of the institute's Banking Research Department, who was in charge of drafting the report, told China Daily the key issue is to clarify the committee's area of responsibility, structure and operational mechanism.

The central bank will play a dominant role in terms of financial regulation, leading the coordination work with three other special regulatory committees of banking, securities and insurance, Wang said.

On Friday, the People's Bank of China outlined the unified standards on regulating the country's more than $15 trillion in asset- and wealth-management products across the financial sector, a move that will cement the central bank's authority and tighten the grip on "shadow banking".

The new regulation, aiming to crack down on risky, off-balance-sheet and highly leveraged borrowing among financial institutions, requires asset- and wealth-management products to set aside 10 percent of the management fees as a provision.

A guaranteed rate of return for investors made by the asset managers is no longer allowed, and investors should take all risk by themselves, according to a statement on the PBOC's website.

Personal investors cannot use bank loans as investment capital in these products, while enterprises with high debt level are banned for these investments, according to the PBOC.

A unified macro-prudential regulatory framework led by the central bank lays the foundation for the supervision function of the Financial Stability and Development Committee to prevent systemic risks, said Wang, of the institute's Banking Research Department.

A standing committee — including members from the financial regulatory organizations, central and local governments' macroeconomic administrative departments, with and without voting rights — should be launched, he said. "Special working groups may be set up as channels to declare professional suggestions from different perspectives," he said.

According to Wang and Chen, a general framework of the committee is expected to be ready before the next year's national congress, which is expected to be held in March.

As to whether the committee will have regular work meetings and whether a detailed disclosure mechanism will be available are subjects for further discussions, they said.