Guo Suqing, Deputy Governor of the People’s Bank of China, Firmly Suppresses Real Estate Bubble
Emphasizes Importance of Basel Accord... Bank Loans Within Certain Capital Limits
[Asia Economy Beijing=Special Correspondent Jo Young-shin] Guo Shuqing, chairman of China's financial regulatory authority, the China Banking and Insurance Regulatory Commission (CBIRC), identified real estate-related bank loans as a "gray rhinoceros." A gray rhinoceros refers to a risk factor that is easily overlooked.
According to the economic media Caixin on the 1st, Chairman Guo stated in an article titled "Completing the Modern Financial Supervision System," published in the recently released "14th Five-Year Plan (14·5 Plan) Commentary" by Chinese authorities, "Currently, a considerable amount of funds is flowing into real estate, with real estate-related loans accounting for 39% of bank loans," adding, "At this stage, real estate is the biggest gray rhinoceros."
Guo Shuqing, Chairman of the China Securities Regulatory Commission
Chairman Guo added that the authorities must firmly suppress the real estate bubble.
In August, Guo also warned in an article for the Communist Party theoretical journal Qiushi that the real estate bubble is the largest gray rhinoceros threatening China's financial stability.
He also hinted that the internet finance sector would no longer enjoy broad freedom as before under the pretext of financial innovation.
Guo stated, "The boundaries of financial innovation must be well defined," criticizing, "In the early stages of China's internet finance development, some internet lending platforms engaged in illegal operations under the guise of innovation, resulting in massive financial and social risks."
He continued, "Pursuing profits with capital is the normal aspect of commercial activities," emphasizing the importance of the Basel Accord, which limits banks to lending only within a certain range of their capital.
This remark is interpreted in connection with the recent situation where Alibaba founder Jack Ma openly criticized the authorities for applying bank-like capital adequacy regulations to internet lending companies such as Ant Group and was subsequently strongly "punished" by the authorities.
Chairman Guo's CBIRC is a financial authority similar in nature to South Korea's Financial Services Commission, and Guo concurrently serves as the Party Secretary of the Communist Party Committee of the People's Bank of China, the central bank. In terms of Party ranking, he is higher than Yi Gang, governor of the People's Bank of China.
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