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Mar 13, 12:22 AM EDT

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BEIJING (AP) -- China's government announced plans Tuesday to create a newly powerful regulator to oversee scandal-plagued banking and insurance industries as they try to reduce debt and financial risks.

The move is in line with the ruling Communist Party's efforts to tighten control over state-owned entities that dominate industries including banking, telecoms and energy in an effort to make them more efficient and productive.

The party's stated priorities this year include reducing financial risk following a run-up in corporate and local government borrowing that prompted global rating agencies to cut Beijing's government credit rating last year.

The new agency, a merger of separate Cabinet bodies that oversaw banks and insurers, will be charged with "preventing and dissolving financial risks," said the plan was submitted to the ceremonial national legislature for endorsement.

Beijing has launched a series of regulatory overhauls over the past two decades, creating and merging agencies, to respond to the growth of China's vast, state-owned banking, insurance and finance industries.

The division of responsibility among multiple agencies prompted concern finance regulators were failing to keep track of increasingly complex financial activity by banks, insurers and companies.

The insurance industry has been shaken by February's takeover by regulators of Anbang Insurance Group, one of China's biggest insurers, and the arrest of the top regulator on graft charges. Other insurers face complaints they indulged in reckless speculation in stocks and real estate.

Industry analysts contend bank are using financial tools that obscure their levels of lending and risk.

Some major companies that have run up multibillion-dollar debts to banks face pressure to pay those down while others face questions about their solvency.

The latest change would bring together the China Banking Regulatory Commission and the China Insurance Regulatory Commission. The plan made no mention of the third financial agency, the China Securities Regulatory Commission.

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