"Through the CFWC, Xi and his allies could more rapidly roll out a reshuffle to replace the remaining legacy technocrats with people more loyal to them," he said. The CFWC would be headed by a member of China's elite seven-member Politburo Standing Committee, the two sources said, with incoming premier Li Qiang or Ding Xuexiang the leading contenders, one of them said. China's financial sector is overseen by the People's Bank of China (PBOC), the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, with the cabinet's Financial Stability and Development Committee at the top.
All are government bodies, as opposed to party organisations. Under the new proposed structure, the party would take on a direction-setting role for the economy and regulatory bodies. "The situation is vastly different to when the CFWC was set up the first time," according to Xu Tianchen, economist at the Economist Intelligence Unit.
CHECKS AND BALANCES?
During Jiang's era, state media spoke of a need to ensure a
separation between the responsibilities of the party and those
of government and business. Under Xi, the party's role is much
more pervasive.
"Overall, the top leadership is not very satisfied with the
situation in the financial sector, and the problem is related to
the political stance among the state-owned financial
institutions," said Xu, pointing to what he said was
frustration among senior party officials that their directives
are not properly implemented.
Analysts said the PBOC could lose more of its already
limited independence if the CFWC was brought back with a remit
that included determining the direction of economic policy.
"Xi throughout wants centralised, vertical power through
Party committees that directly report to him," said Alfred Wu,
associate professor at the Lee Kwan Yew School of Public Policy
at the National University of Singapore.
"The problem is, we don't know whether the CFWC will have
any checks and balances," he said.
Iris Pang, chief economist for Greater China at ING, said
the CFWC could be a better way to monitor financial system risks
emerging from industries such as real estate.
"But this could also lead to policies replacing some market
forces, which may not be ideal for financial liberalisation",
she said.
(Reporting by Joe Cash; Additional reporting by Laurie Chen in
Beijing, Xie Yu in Hong Kong and the Beijing newsroom; Editing
by Tony Munroe)
