Chinese regulation is too complicated
November 02, 2009 | BY
clpstaff &clp articles &Although the PRC's regulators and regulations have coped well with recent financial market turmoil, the system is still too complex and not likely to…
Although the PRC's regulators and regulations have coped well with recent financial market turmoil, the system is still too complex and not likely to become any simpler in the near future.
During a panel discussion at an industry conference in Hong Kong, Allen & Overy Beijing counsel Jane Jiang gave regulation in China a score of “between seven and eight” in terms of how well it has coped with the global economic downturn.
“This is very high for a jurisdiction people have had some headaches with,” she said, adding that the PRC's restrictive regulation has actually protected it from outside influence during recent difficult times.
“There are clearly too many regulators and layers of regulations,” Jiang said
The framework in mainland China features institutional, market, foreign exchange and state asset regulators, which can hamper innovation – though, given the financial crisis, innovation is no longer the top priority for Chinese financial regulators.
When asked whether consolidation was likely in the near future, Jiang said there was not much incentive for this in the next five years, although at the product level there may be more co-ordination.
“For example, OTC financial derivatives in the interbank market [may be] centralised and regulated by the central bank,” she said. “Other than that, I'm pessimistic about significant consolidation in the near future.”
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