China Banking and Insurance Regulatory Commission (CBIRC) - Chinese financial supervision

In recent years, China has become one of the most important centers for the development of the world economy. Along with the growing richer society, the financial sector developed dynamically. The development of the financial market made it necessary to introduce new regulations and specialized government units that supervise certain areas of the Chinese financial market. Since 2018, the institution has been playing the role of the "gendarme" of the Chinese financial market China Banking Regulatory Commission (CBRIC), which was created from the merger of CBRC and CIRC.

China Banking Regulatory Commission

One of the first steps to professionalize the financial market in China was the appointment China Banking Regulatory Commission (CBRC)which was one of the government agencies. It was established in 2003. The cause of the CBRC was the problems of the banking sector, which struggled with undercapitalization and non-transparent business practices. The first chairman of the CBRC was Liu Mingkandg, who held this position until 2011. Liu graduated from the University of London in 1987. During his term of office, he arranged many matters related to the banking sector in the Middle Kingdom. As a result, the Chinese banking sector was doing very well during the bursting of the US housing bubble. As a result, the financial sector experienced this turbulent time with a dry foot. With his retirement, Liu Mingkandg was replaced by Shang Fuling, who previously served as chairman China Securities Regulatory Commission (CSRC). After six years, he was replaced by the last president of the CBRC - Guo Shuqing.  

China Insurance Regulatory Commission

Xian Junbo. Source: chinadaily.com.cn

Before the CBIRC, the agency responsible for regulating the insurance market was the CIRC, the China Insurance Regulatory Commission. CIRC was founded in 1998 and its task was to ensure that the participants of the insurance market meet market regulations and the highest market standards. It is worth mentioning that in September 2008, CIRC established China Insurance Security Fund Co., Ltd with capital of CNY 100 million. The established organization was responsible for managing the insurance protection fund, which exceeded CNY 7 billion. The aforementioned fund allows, among others pay out full policy claims up to CNY 50 (above this up to 000%) in the event of bankruptcy of the insurer. One of the heads of CIRC was Xiang Junbo, who has served since 90. In April 2017, the Central Commission for Discipline Control of the Communist Party of China launched an investigation into "serious violations". On September 23, 2017, Xiang Junbo was expelled from the Chinese Communist Party. In 2019, he was convicted of corruption. 

China Banking and Insurance Regulatory Commission

In 2018, it was concluded that there would be no point in having two separate agencies, as it sometimes happens that a given financial institution is regulated by both the CIRC and the CBRC. So there was an idea to combine these two agencies into one "super-regulator". So the CBIRC was founded, which deals with the regulation of the Chinese banking and insurance sectors. The said agency is also responsible for caring for consumers and minority shareholders of regulated entities. The basic functions of CBIRC are as follows:

• Regulates and supervises the banking and insurance sector; 
• Introduces new regulations and recommendations for entities from the banking and insurance sector;
• Seeks to create a safe environment for consumers;
• Fully supervises the operation of pawnshops, leasing or factoring companies or online lenders;
• Grants licenses to banks and insurers;
• Publishes the scope of best practices and regulations regarding risk management and internal control;
• Prepares market reports on the banking and insurance sector;
• Controls local supervisors of the banking and insurance market;
• It counteracts illegal activities in subordinate markets;
• Carries out other activities commissioned by the Chinese government.

Organizational structure of CBIRC

According to the information on the government agency's website, the CBIRC consists of 27 departments. Their tasks are strictly defined so that the responsibilities of the departments do not overlap. 

Due to the fact that China is a large area, both in terms of area and population, regional branches were introduced. As a result, CBIRC can react faster to imbalances in individual Chinese provinces. CBIRC consists of 36 regional branches. They have both the most developed economic areas (including Shenzhen, Beijing, Guangzhou) and less developed areas (e.g. Inner Mongolia). 

CBIRC authorities

Guo Shuqing Source: CBIRC.gov

The main figure in a government agency is Guo Shuqing. He was born in 1956 in Inner Mongolia. In 1982 he graduated from the University of Nanking. He holds a Master's degree in Scientific Socialism and holds a PhD in law from the Chinese Academy of Social Sciences.

He was the last chairman of the CBRC. Following the merger of banking and insurance supervision, Guo became chairman of the CBIRC. This is a person who has extensive experience in working both in government institutions and companies. Prior to working in banking sector regulators (CBRC, CBIRC), Guo Shuqing served as the governor of Shandong Province and was the chairman of the China Securities Regulatory Commission. He worked as a chairman at China Construction Bank. Guo Shuginq was also the Vice Governor of Guizhou Province. He is also a member of the Communist Party of China.

The senior management includes 4 more vice presidents and 1 inspector. 

• Ca You - in 1963 he was born in Penglaj, Shandong Province. During his studies, he obtained the title of doctor of economic sciences. Appointed Vice President of CBIRC in March 2018. Previously, for 4 years he was vice president in the banking sector regulatory agency (CBRC). Before working for the CBRC, he worked from 1985 in the General Office of the State Council. 
• Zhou Liang - in 1971 he was born in Yongzhou, Hunan Province. He earned a master's degree in economics. In 1995, at the age of 24, Zhou Liang joined the Chinese Communist Party. He was elected a delegate to the 2018th Congress of the Communist Party of China. He is currently a member of the Central Committee for the Control of Discipline of the CCP. Since March XNUMX, he has been the vice-president of CBIRC. Before that, he held many functions in central and local government for many years.
• Liang Tao - in 1962 he was born in Rongcheng, Shandong Province. Liang Tao has a Master's in Management. From March 2018, he became the vice president of CBRIC. Before that, in 2015-2018 he was the vice president of CIRC. Previously, for twelve years he worked in the same agency as a Director in the Department of Reform and Development. Interestingly, in 2007 he was delegated to the Organizing Committee of the Olympic Games in Beijing.
• Xiao Yuanqi - was born in 1966 in Hunan Province. He holds an MBA from Cranfield University in the United Kingdom. He also holds a master's degree in economics. He also educated at the People Bank of China School of Finance. From February 2021, he works as the vice president of CBRIC. In the years 2003 - 2018 he worked in the Chinese banking market regulator in various positions (CBRC). Previously, he worked for 13 years in various positions at the Central Bank of China.

CBIRC and Chinese fintechs

The dynamic development of financial applications has increased the risk in the Chinese financial sector. Super applications such as WeChat or Alipay began to offer more and more complex products (savings, loans). Over the past few quarters, CBIRC has started to look more and more at the operational activities of Chinese fintechs. March 2, 2021 Guo Shuqing, the head of CBIRC mentioned that Chinese fintechs will have to meet capital requirements in the next two years. At the same time, the CBIRC is looking more closely at online platforms offering insurance services, as it believes that some of them can operate without obtaining special licenses.

In December 2020, the regulator banned offering interest-bearing deposit products on online platforms. As a result, applications such as Alipay, J.D. Digits or Didi Finance have removed this type of product from their applications.