China’s Banking Regulation Updates Signal Shift Towards Digital Future

Hong Kong, July 8, 2024 - A Shift in Focus?

As China’s local governments struggle under the weight of debt, a former adviser to the central bank has called for treasury bonds to ease the burden. Meanwhile, Hong Kong’s biggest lender was ordered to pay a record fine for offering incentives to unauthorized intermediaries.

Digitalization and Taxation: Riding the Wave

• The head of China’s tax authority emphasized the need for taxation administration to ride the wave of digitalization, citing the potential of data to aid in closing loopholes.
• Banks and financial service companies are also recruiting more educated and tech-literate personnel for debt collections, reflecting new rules that have professionalized the industry.

New Asset Recovery Strategy: More Needs to Be Done

• The city-state has unveiled a new asset recovery strategy, but experts say more can be done to address the issue.
• The collapse of FTX has presented an opportunity for China’s digital assets market, with eight asset managers seeking to launch funds in the country.

Cross-Border Trading and Capital Flow: A Proposal

• China’s securities watchdog has proposed amending a funds recognition scheme with Hong Kong to boost cross-border trading and capital flow between the two markets.
• The Shanghai Stock Exchange has also barred a local chip maker from listing its shares, marking the first such moratorium since China rolled out its registration-based IPO system.

Central Bank Governor: No Drastic Moves in Policy Toolbox

• China’s central bank governor emphasized that there will be no drastic moves in the policy toolbox to support the economy.
• Rating agencies S&P Global and Fitch expect more pain for the crisis-hit property sector.
• Chinese companies trading in Shenzhen have underperformed those listed in Shanghai this year, underscoring the delisting risk faced by smaller companies.

CSRC’s Vow: Step Up Oversight and Punish Irregularities

• The CSRC has vowed to step up oversight and severely punish irregularities, including illegal stake reductions by big shareholders taking advantage of short selling.
• Mainland China’s top securities watchdog has proposed amending a funds recognition scheme with Hong Kong.

Digital Assets Market: Surging Crypto Market Improves Outlook

• The surging crypto market is improving the outlook for deal flow following the approval of bitcoin and ether ETFs.
• The platform now allows Chinese citizens living abroad to sign up for an account, even as the mainland imposes a strict ban on crypto trading.

Hong Kong’s New Policy: Keeping Stock and Derivatives Markets Open

• Hong Kong is working hard on a new policy to keep its stock and derivatives markets open during typhoons or torrential rains, with a view to making the change in September.
• China’s securities watchdog has said that its moves to raise the bar for IPOs, expel unqualified firms from stock exchanges and exercise greater scrutiny are designed to ensure the “survival of the fittest”.

Virtual Asset Market: Optimism Remains

• Despite recent withdrawals, some optimism remains about the future of Hong Kong’s virtual asset market.
• State-owned China Cinda Asset Management is the latest major client to terminate its contract with PwC, after several big firms cut ties with the auditor amid growing concerns about possible financial fraud tied to embattled developer China Evergrande.

Central Bank’s Proposed New Asset Recovery Strategy

• China’s central bank has proposed a new asset recovery strategy, and experts say more can be done to address the issue.
• The collapse of FTX has presented an opportunity for China’s digital assets market, with eight asset managers seeking to launch funds in the country.