China to meet new economic challenges head-on

China will resolutely curb the resurgence of various types of financial risks and properly handle new challenges arising from a complicated economic and financial situation amid the novel coronavirus outbreak, a regulatory official said on Thursday.

A spokesperson from the China Banking and Insurance Regulatory Commission said the commission will firmly crack down on financial statement whitewashing banks, and urged banks to adopt a precise asset allocation strategy, expose their nonperforming loans (NPLs) and establish loan impairment provisions in the full amount, in addition to guiding banks to step up the disposal of NPLs through multiple measures.

The country's top banking and insurance regulator will deal with high-risk financial institutions based on relevant laws and rules, ensure responsibilities are fully resumed by all those involved, and improve the loss-sharing mechanism.

The commission encouraged small and medium-sized banks to incorporate investors, including foreign and privately-owned companies, in market-oriented ways and also encouraged mergers, restructuring and equity investment in small and medium-sized banks in accordance with relevant laws and rules.

Apart from supporting commercial lenders in expanding channels for capital replenishment by issuing common shares, preferred shares, perpetual bonds and tier-2 capital bonds, it also encouraged local governments to help small and medium-sized banks replenish capital by raising funds in various ways.

To persevere in cracking down on shadow banking, the regulator will build a comprehensive statistical monitoring system, with a focus on strengthening the monitoring and analysis of high-risk shadow banking business, and take proper actions to mitigate risks.

It will also continuously fight against internet financial risks such as risks associated with peer-to-peer lending, ban internet-based institutions illegally engaged in financial activities and keep strengthening regulation of online insurance, the spokesperson said.