Global hedge fund managers such as Kyle Bass have been scathing in their assessment of financial danger in the world's second-largest economy, pointing to an ever-growing pile of debt and ballooning assets in recent years in the shadow-banking industry. China is among economies most at risk of a banking crisis, the Bank for International Settlements said in a study published this month, citing early-warning indicators including household borrowing.
Guo, 61, a fluent English speaker, will continue his mandate of controlling financial risk, which culminated last month in the unprecedented government takeover of Anbang Insurance Group Co. The CBRC under Guo has also shown its teeth by slapping a record amount of fines on financial institutions for such offences as concealing the true extent of their bad loans.
The banking regulator, created in 2003, supervises over 4,000 banks with $40 trillion in assets, while the insurance regulator, established in 1998, oversees 17 trillion yuan ($2.7 trillion) of insurance assets.
Still, challenges facing the regulator include:
- Wealth management products remain the biggest and probably most dangerous corner of the country's shadow banking industry with $4.7 trillion of outstanding value, or 36% of China's GDP .
- Household debt surged by 21% in 2017 to 40.5 trillion yuan.
- China banks were under-capitalized in any sudden economic downturn following a credit boom.
- IMF warned Malpractice and irregularities continue at financial institutions even as more than 2.9 billion yuan of penalties and confiscations of funds were imposed in 2017, a 10-fold surge from the previous year.
— Read Genworth Posts Term Loan Credit Agreement on ThinkAdvisor.
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