AP Radio AP Radio News:

Mar 13, 2:10 AM EDT

China merges bank, insurance regulators to tackle risk

AP Photo
AP Photo/Mark Schiefelbein

Made in China: Too Many Imports Too Soon?
Latest News
China appoints US-trained central banker

China's next economic czar: Harvard-trained Xi adviser

US Chamber of Commerce warns Trump against China tariffs

Chinese stock regulators levy $870M fine in scandal

China merges bank, insurance regulators to tackle risk

Video photo gallery on trash in China
China celebrates 60th year
Panorama of Tiananmen Square
Remembering Tiananmen
A year after China quake
Migrant laborers struggle to find work
Checking Beijing's Air
China's morning exercises in parks
Exploring Chinese Cuisine
Beijing Architecture Changes For Games
Woman Rescues Homeless Quake Dogs
China Holds Funeral for Panda
China's 1-child Policy Causes Extra Pain
Map of Earthquake Zone in Central China
Entrepreneurs Move Into, Out of China
Olypmics in Beijing Highlight China's Water Woes
Foreign Buyers Head to China Despite Problems
Coal Use Produces Pollution, Illness
Coal Means Profit, Woes for China
China Extending Its Reach Around the World
In China, the Desert Closes In
Latest News
Recent developments surrounding the South China Sea

China names former missile force commander defense minister

China's next economic czar: Harvard-trained Xi adviser

AP PHOTOS: From flags to carpets, red rules Chinese politics

Chinese Premier Li Keqiang appointed to second 5-year term

Audio Slideshow
Panorama of Tiananmen Square
Remembering Tiananmen

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 risk.

The move is in line with the ruling Communist Party's efforts to gain more direct control over the state-dominated economy and reduce financial risk following a run-up in debt that prompted global rating agencies to cut Beijing's government credit rating last year.

The new agency, a merger of separate Cabinet bodies that oversee banks and insurers, will be charged with "preventing and dissolving financial risks," said the plan submitted to the ceremonial national legislature for endorsement. It did not mention the third financial regulator, which oversees the securities market.

Separately, the plan also calls for creating a national market regulator, drawing in anti-monopoly, pricing and other powers from food and drug, industry and product quality agencies.

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 latest announcement follows Beijing's promise in November to raise and eventually eliminate limits on foreign ownership of banks, insurers and securities firms.

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

Despite being mostly state-owned, Chinese banks, insurance and securities firms are highly autonomous. Bosses of the biggest state-owned institutions often rank higher in the ruling party than the officials in charge of regulatory agencies, allowing them to defy rules.

Lack of coordination hampered the official response to a stock market collapse in 2015.

The insurance industry has been shaken by corruption scandals and complaints of reckless speculation in stocks and real estate. Banks face complaints they obscure their levels of lending and risk.

Regulators seized control of privately owned Anbang Insurance Group, one of China's biggest insurers, in February and said they were acting to protect its solvency. Two other insurers were penalized earlier following complaints of reckless speculation.

The top insurance regulator, Xiang Junbo, was expelled from the ruling party in September and charged with taking bribes. Authorities have yet to give further details.

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.

China's total corporate, local government and household debt surged to the equivalent of more than 270 percent of annual economic output, high for a developing country, after Beijing used repeated infusions of credit to shore up economic growth following the 2008 global crisis.

Authorities announced plans last year to allow some state-owned companies to pay down debt using stock but few have done so.

Officials speaking this week at the annual meeting of the ceremonial legislature have tried to defuse public concern. The central bank governor, Zhou Xiaochuan, said the rise of debt has slowed and risk is manageable.

The latest change would bring together the China Banking Regulatory Commission and the China Insurance Regulatory Commission.

© 2018 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.