China Minsheng Bank Corp has been thrust into the media limelight with the disappearance of 3 billion yuan ($436 million) from its wealth management products (WMPs). An inquiry revealed that the WMPs sold to 150 private banking customers didn't even exist.
Separately, Xiang Junbo was dismissed from his post as chairman of China Insurance Regulatory Commission for violations of discipline this month, the highest-ranking financial official to be investigated so far. Another financial figure - Yang Jiacai, assistant chairman of China Banking Regulatory Commission (CBRC) was also reported to be under investigation over his connections to Xiang's case. Recent financial abuses highlight the significance of China's anti-corruption battle in this sector.
With the collusion between officials and businesspeople, the financial sector is in the deep-water zone of China's anti-corruption drive. Business tycoons are sometimes shielded by corrupt figures to illegally steal wealth. This will break market rules and jeopardize the market's role in the distribution of financial resources. As a consequence, finance will gradually derail from supporting the real economy to creating capital bubbles, drawing China's economy into a vicious circle.
Corruption will negatively impact the central government's policies and its authority as well. Problems in the financial system will harm China's real economy, and jeopardize China's overall economic security and people's livelihoods.
Corruption in the financial sector must be strictly punished. The CBRC has recently introduced a number of strict supervisory policies. The 34th meeting of the Central Leading Group for Deepening Overall Reform held Tuesday highlighted China's fight against money laundering, funding for terrorism and tax evasion, and stressed the country's efforts to establish a supervision system and structure to combat the above three unlawful activities through the use of financial intelligence, monitoring and data sharing. A total of 34 high-level financial figures have been investigated in four years, according to media reports. China's anti-corruption efforts are intensifying in the financial sector.
Gao Bo, deputy head of the disciplinary team at the Chinese Academy of Social Sciences, claimed earlier that 2017 would be an important year in the anti-graft battle, with the government gradually providing fundamental solutions to corruption. It is hoped that a financial supervisory mechanism with Chinese characteristics that caters to the market can be established to protect the interests of investors and consumers, and prevent capital bubbles from emerging.
The central government's intensifying efforts to combat financial corruption herald an anti-corruption storm in this sector.