Shannon Brandao
From the article: "NYT [excerpt]: In his decade as China’s top leader, #XiJinping has asserted greater control for himself and the Communist Party over the country’s economy. Now, Mr. Xi has moved to extend that power more forcefully than ever over China’s #financialsystem.
The Communist Party issued a detailed ideological statement on Friday in Qiushi, the party’s main official theoretical journal, that made clear that it expected #banks, #pensionfunds, #insurers and other #financial organizations in #China to follow Marxist principles and pay obedience to Mr. Xi.
The Qiushi paper, which was being closely studied by #bankers and #economists in China, could cut against efforts by Beijing to show that the #economy is open to #investment even as it places a heavier hand on #business.
Barry Naughton, an economist at the University of California at San Diego who has long studied China’s transition to a #marketeconomy, said that the document signaled that the #finance sector would be subject to ever-tighter oversight and forced to serve government policies more actively.
'The financial sector will not be expected to push for market-oriented reforms or even necessarily maximize profit,' he said. 'As a program for the financial sector, it is ambitious, disappointing and somewhat ominous.'
Western banks like HSBC, BNP Paribas and JPMorgan Chase have sizable operations in mainland China that fall under the purview of Beijing regulators. But some financial institutions have been paring back.
Citibank announced on Oct. 9 that it was selling its consumer wealth management business in mainland China to HSBC. Vanguard has been exiting its limited operations on the mainland.
China has long demanded that financial firms follow Beijing’s policies and the principles of the party. Yet for nearly four decades after the death of Mao in 1976, the party seemed to be gradually loosening its controls over society, the economy and banking. Financial institutions were encouraged to innovate and pursue profits.
Mr. Xi has been broadly reversing this liberalization. He and other leaders had called for tighter regulatory control during a conference on financial policy in late October. The Qiushi essay underscored that this shift is now cemented in place as part of the party’s ideology.
That has made market-oriented economists increasingly nervous.
'#Politics will for sure further dictate China’s finance, effectively moving China even closer to how it was before the reforms started in 1978,' said Chen Zhiwu, a finance professor at the University of Hong Kong."
#news #business