Practical analysis for investment professionals
03 September 2013

Poll: Will China’s New “Super Agency” Lead to Faster Financial Reforms and Liberalizations?

In a poll conducted earlier this week in the CFA Institute Financial NewsBrief — Asia Pacific Edition, we asked readers whether China’s recently established “super agency” will lead to further acceleration of financial sector reforms and liberalizations.

China’s State Council has recently established a super agency headed by Governor Zhou Xiaochuan of PBoC (the central bank) to coordinate the four financial sector regulators — CBRC (banking), CSRC (securities), CIRC (insurance) and SAFE (foreign exchange). With this super agency, will we see further acceleration of financial sector reforms and liberalizations?

Poll: Will China’s New "Super Agency" Lead to Faster Financial Reforms and Liberalizations?

The lack of coordination among regulatory agencies within China’s financial sector is a common concern. Thus, it is not surprising that a majority of poll respondents view the new super agency favorably, believing it might pave the way for faster reforms and liberalizations. With only 19% of respondents voting no to the question, the reception appears better than expected, given that many remain highly skeptical about the new leaders’ resolve and ability to push through reforms and liberalizations, which are among the main themes that have been frequently mentioned by officials since the 18th Party Congress last year.

Concrete actions have been taken to liberalize the Qualified Foreign Institutional Investor (QFII), Renminbi Qualified Foreign Institutional Investor (RQFII), and Qualified Domestic Institutional Investor (QDII) schemes, as well as the cross-border mutual recognition of funds. As the pace of liberalization determines the timing and extent of China A-shares going into the MSCI and FTSE global indices, the super agency helps promote further internationalization of China’s equity market, bringing offshore capital as well as international management and governance best practices into China’s companies.

Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

About the Author(s)
Samuel Lum, CFA

Samuel Lum, CFA, was director of Private Wealth and Capital Markets at CFA Institute, where he focused on wealth management and capital markets, mainly in an Asia-Pacific context.

2 thoughts on “Poll: Will China’s New “Super Agency” Lead to Faster Financial Reforms and Liberalizations?”

  1. In China, implementation of rules is the key. It has all the rules in the world, but implementation remains tardy…

    1. Sam Lum says:

      Thanks for your comment Sumanth. I think better coordination among the regulatory authorities and simplification of bureaucracy, a stated goal by Mr. Xi Jinping at the 18th party congress [ ], will help streamline implementation. We will see if there are more concrete reforms coming out of this weekend’s CPC Party Central Committee 3rd Plenum session [ 三中全会 ].

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