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China specifies rules on financial holding companies

Updated: Sep 04,2020 07:41 PM

Premier Li Keqiang stressed efforts to pursue a prudent monetary policy in a more flexible and appropriate way in order to promote steady economic and financial operation during the State Council’s executive meeting on Sept 2.

The Premier emphasized the need to maintain policy strength and sustainability, refrain from resorting to a deluge of strong stimulus policies and channel funds into the real economy.

The State Council also specified rules on the establishment of financial holding companies to better serve the real economy.

Under the impact of the epidemic and the complex domestic and external economic conditions, a series of well-targeted and appropriate financial policies have been implemented this year to ensure stability on six fronts and security in six areas – and so far these policies have had good effects, secured market entities and boosted economic recovery, the Premier said.

"The financial market and big companies were not the biggest victims of the epidemic. The first to be affected were small, medium and micro enterprises and individual businesses, especially in the service sector, as consumption in many places has not yet fully recovered," the Premier said.

"Under such circumstances, we must keep concentrated and maintain policy strength and sustainability."

Decision on Implementing the Access Management of Financial Holding Companies was passed at the meeting, specifying that non-financial enterprises, natural persons and others, which hold or actually control two or more financial institutions of different types with total assets that meet a certain requirement, should apply for the establishment of a financial holding company.

The financial sector is an important support for economic development, Premier Li said, adding that the decision will help strengthen financial holding companies’ capabilities of serving the real economy while preventing and defusing risks.

"Management of involved financial holding companies should be conducted in accordance with laws and regulations," the Premier said.

"And more facilitating services should also be provided for small and medium-sized financial institutions to make them better serve the real economy."

The decision should be implemented at a steady pace and in an orderly way, and related departments should intensify guidance and supervision to prevent and defuse risks effectively, he stressed.