Beijing said to create new office coordinating finance and economy

China’s Cabinet has created a new department to coordinate financial and economic affairs, according to a person familiar with the matter, as the country’s leaders seek to restore investor confidence in the government’s regulation of markets.
The department under the State Council’s general office is tasked with coordinating between China’s financial and economic regulators and gathering data from local offices, according the person, who asked not to be identified because the move hasn’t been publicly announced. Agricultural Bank of China Vice President Li Zhenjiang was tapped as deputy director responsible for its daily operations and took the new post last week, the person said.
The move signals a broader recognition among Communist Party leaders that the government’s current structure must be revamped to properly manage the gyrations of China’s markets and its economic slowdown. Investors have voiced renewed concern about the government’s credibility following a series of interventions since this summer to arrest a market slide that led equities to fall globally.
The Shanghai Composite Index has plunged more than 17 percent since late December, and leaders had to abandon a newly imposed stock circuit-­breaker system after stock slides twice halted trading for the day last week.
Previously, State Council oversight of finance and securities fell to a State Council department that handles myriad other issues including land, environmental protection, forestry and tourism. It’s unclear how much power the new department will have given that President Xi Jinping manages a separate body that steers financial policy, the Central Leading Group on Financial and Economic Affairs.
In the meantime, leaders are planning a broader streamlining of China’s complex regulatory structure. The government is considering a plan to combine the three regulators that oversee securities, insurance and banking, according to other people familiar with the plan. Those discussions gained pace following the market turmoil and the government’s decision to devalue the yuan. The currency has lost nearly 9 percent of its value against the dollar in the last two years.
China’s bond market is a typical example of the country’s conflicting regulatory scheme. The central bank governs bond sales in the inter-­bank market, the China Securities Regulatory Commission oversees bonds issued by listed companies and the National Development and Reform Commission approves bond issuance by non-public firms.
The State Council didn’t respond to a faxed request for comment, while a press officer at Agricultural Bank of China declined to comment on Li’s status. A China Insurance Regulatory Commission spokesman declined to comment, and the securities and banking regulators also didn’t respond to faxed requests for comment.
Liu He, an economic policy adviser to President Xi Jinping, wrote a preface of a recently published book saying that China should speed up “the establishment of financial regulation mechanisms that fit the profile of modern finance, to be able to enhance coordination and advance cooperation, and have effective and efficient functions.” AP