China Insurance Regulator Expands Rules

On Wednesday, the insurance regulator of China has expanded the rules that manage shareholding in the country’s insurers in a bid to create the ownership structures more clearly.

The rules, which currently have 94 provisions, arise after the Anbang Insurance Group, a firm dogged with allegations of opaque shareholding structures, has been seized by the China Insurance Regulatory Commission.

Meanwhile, the Chinese authorities are now in the second year of a widening campaign to lessen the risks in the financial system, including a crackdown on riskier investment products which is sold by some insurers and probes into whether they are providing covert funding to local governments.

According to the document that was handed out at a press conference, it was stated in the new rules that an insurance company should have a clear and reasonable shareholding structure and must disclose the actual controlling entity to the regulator.

The head of the commission’s working group in control of Anbang and the director in CIRC, He Xiaofeng, stated that the regulator is having difficulties on facing the authenticating fund sources.

He also added that the origins of financial chaos are the problems in shareholding structure.

The rules will cover requirements for the qualifications and conduct of shareholders and the management of stock rights.

The new rules will be effective starting April 10.

China “Fully Confident” to Fend Off Debt Risks

In other news, Xiao Jie, China’s Finance Minister, stated on Wednesday that China is fully confident of its skill to fend off systemic debt risks while it continues to strengthen its control over the debt of the local government.

According to Xiao, China will set quotas on local government debt issuance and will keep cracking down on “chaotic” debt financing.

Meanwhile, the local government finances and the escalating debt levels in China have been a source of fear for policymakers as the central government is eyeing to remove expectations of implicit guarantees for government financing vehicles.

“Whoever raised the debt would be held responsible for it,” stated Xiao, emphasizing that he is fully confident that such measures would stop the country from suffering systematic debt risks.

Xiao also added that the authorities are not expecting significant changes in the government debt radio in the near future.

At the end of 2017, the total outstanding government debt of China stood at 29.95 trillion yuan or $4.73 trillion. Meanwhile, its debt radio against GDP dropped to 36.2 percent from 36.7 percent in 2016.

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