File photo: IC

Provincial governments in China are striving to attract veteran financial services executives to take vice-governor positions, a move that observers said would combat systemic financial risks and help the financial industry serve the real economy.

There are 15 provincial vice-governors with long-term experience in the financial services sector including state-owned banks, joint-stock banks as well as regulatory bodies such as the People's Bank of China (PBC), the central bank, and the China Banking and Insurance Regulatory Commission, the 21st Century Business Herald reported Thursday.

On September 28, Ge Haijiao, who was president of China Everbright Bank for less than a year, assumed the vice-governor's post of North China's Hebei Province, according to the website of the Hebei government.

Earlier in the month, three provincial vice-governors' positions were filled with veterans of the financial sector. Li Bo, a senior member of the PBC, became vice-mayor of Southwest China's Chongqing Municipality; Tan Jiong, vice-president of state-owned Industrial and Commercial Bank of China, took the position of vice-governor of Southwest China's Guizhou Province, and Wu Wei, vice-president of Bank of Communications, became vice-governor of North China's Shanxi Province.

"Hiring veteran executives from such backgrounds can help local economic development via financial services," said Dong Ximiao, deputy dean of the Chongyang Institute for Financial Studies at Renmin University of China.

Dong told the Global Times on Thursday that as local governments also bear some responsibility for regulation, apart from the central government, they need more professionals who have the ability to tackle risks.

"This also shows that professionals will take senior administrative posts to increase management efficiency, and the financial sector has become a very significant one that needs such people," Wan Zhe, chief economist with the International Cooperation Center of China's National Development and Reform Commission, told the Global Times on Thursday.

"The world is not only about globalization but also financialization," Wan noted.

China has been increasing the supervision of systemically important financial institutions in recent years to forestall systemic risks and maintain the prudent performance of the financial system.

Preventing financial risks and tackling local government debt are two significant tasks that the financial veterans are mainly engaged in, analysts said.

"There are still some financial messes to clear up and put into an orderly and reasonable condition, like the peer-to-peer online lending platforms as well as mounting debt in local governments," said Wan.

The overall debt ratio of local governments was 76.6 percent,  lower than international norms, the Ministry of Finance announced in January.

A total of 3.04 trillion yuan of bonds were issued by local governments in the first nine months of this year, reaching 99.4 percent of the year's quota, according to Shanghai-based financial data provider Wind.

By hiring financial officials, provincial capital cities have also been scrambling for a leading role in regional financial sectors, which reflected the demand generated by local economies' upgrading, analysts said.

Taking the southwestern region as an example, Chengdu, capital of Southwest China's Sichuan Province, as well as Chongqing Municipality, aim to grow their financial industry in the region. "In the past, there were few experienced veterans in that part of China, and local companies lacked financing channels, but as the region's economy is upgrading and outdated capacity being cut, there's a need for people who have the know-how to help boost the economy while preventing risks," said Wan.

"However, it is not appropriate to exaggerate their personal role in managing risks," she added.