China’s finance sector comes to grips with new normal in year since landmark conference

China’s central financial work conference laid down stricter standards for the field one year ago. How have practices and attitudes changed?

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China’s finance sector has lost some of its flamboyance as strict regulations and supervisions have taken effect. Photo: EPA-EFE

Published: 7:00am, 31 Oct 2024

Over the past year, China’s once-flamboyant financial sector has been subject to strict oversight and rigorous regulatory compliance – a tightening of rules that has dampened moods and slammed shut pocketbooks that had been overflowing for decades.

While this change had already been in motion before the twice-a-decade central financial work conference was held, exactly one year ago – a meeting where President Xi Jinping set forth the goal to forge China into a “financial powerhouse” – weaker-than-expected growth for the world’s second-largest economy has complicated matters.

At banks and securities firms alike, pay cuts have been rampant. The industry has also seen occasional lay-offs – a rare phenomenon for a field worth 481 trillion yuan (US$67.4 trillion) and mostly consisting of state-owned institutions.

At the same time, a structural overhaul has been gathering pace as more resources are diverted to bigger market players, with the smaller specimens consolidated through mergers and acquisitions.

“We had a big meeting and again they kept talking about the seriousness of the situation,” said a Shanghai-based analyst at a top Chinese investment bank on Monday. He spoke on the condition of anonymity.

For the analyst, the biggest change the industry has seen in the past year is much stricter regulatory supervision – though he said this is not necessarily a bad thing.