September 15 07:43
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- Former PBOC Deputy Governor Delivers Strongly-Worded Warning Against Government’s Implicit Financial Guarantee
China’s government has used too many resources on maintaining financial stability, while failing to resolve the underlying causes of instability, Wu Xiaoling, vice-chairwoman of the National People’s Congress Financial and Economic Affairs Committee, said at a government conference Friday.
China’s financial market is driven more by fiscal support than by market forces, partly because most market players expect the government to continue its habit of bailing out banks and companies that go under, Wu said. Wu formerly served as deputy governor of the country’s central bank, and also headed its foreign-exchange regulator.
"All financial risks will be ultimately shifted to the government, and that’s why people flock to illegal fund-raising without any proper judgement,” Wu added.
"The government should spend more effort on serving qualified investors, and let the misbehaving ones bear more risks. Investor education will not be effective if you don’t let them pay (for the risks),” Wu said.
"If the central bank and the other three financial regulatory bodies cannot agree on a unified plan to regulate wealth management products, there will be no end to financial misdeeds,” she added.