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Tuesday, December 5, 2023

China Takes a Step Towards Tightening Oversight and Regulation of Financial Sector

BusinessMacroChina Takes a Step Towards Tightening Oversight and Regulation of Financial Sector

China has issued a guideline for improving the oversight of finance and accounting activities in the country. The directive was jointly released by the Communist Party of China Central Committee and the State Council, with the goal of setting up a more robust oversight system by 2025. The guideline recognizes the critical role of finance and accounting oversight in standardizing financial and economic order, but also acknowledges that there are still several problems that need to be addressed.

The guideline outlines a two-step approach to improve the finance and accounting oversight system. Firstly, the government will establish a finance and accounting oversight system by 2025, with primary responsibilities handled by finance departments, and secondary responsibilities undertaken by other related departments. Internal supervision will be conducted within all units, relevant intermediary institutions will carry out practice supervision, and trade associations will be responsible for self-discipline supervision.

Secondly, an operation mechanism will be put in place by 2025, with horizontal coordination between various supervisory bodies, vertical linkage between the central and local governments, and coordination between finance and accounting oversight and other types of oversight.

The directive aims to improve oversight of finance and accounting activities in China, which will help promote sound economic and social development. The guidelines address problems with the supervision system, operation mechanism, laws, and disciplines. The document calls for the establishment of a comprehensive and effective financial and accounting oversight system, and the implementation of a comprehensive and systematic supervision and management system.

Overall, the guideline signals a continued push by the Chinese government to tighten its oversight and regulation of the financial sector. This has become increasingly important as the country continues to grow and expand its influence on the global economy. As a result, the guideline may have a significant impact on companies operating in China, particularly those in the financial and accounting sectors, as they will be subject to stricter oversight and regulation.

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