China’s Banking Sector Thrives Amid Global Economy Slump: Compliance Regulations and Key Developments in 2023

Resilience of China’s Banking Sector in 2023

• Despite a slowing global economy in 2023, China’s banking sector proved resilient.
• The sector’s total assets reached 409.7 trillion yuan, a 10% year-on-year increase.
• The six largest state-owned commercial banks controlled nearly 40% of these assets.

Regulatory Landscape Shifts

NFRA takes over as primary regulatory body

• NFRA replaced CBIRC, bringing significant changes to banking sector regulations.

Regulation Updates

• Regulations governing fixed asset loans, working capital loans, and personal loans were revised.
• Specialized regulations focused on commercial property loans were introduced.
• Chinese enterprises’ medium and long-term foreign debt regulations were updated.

Capital Management Regulations Overhaul

• China began implementing Basel III: Finalizing Post-crisis Reform Standards on January 1, 2024.
• NFRA revised Implementation Measures for Administrative Licensing of Non-bank Financial Institutions, lowering access conditions for foreign investors.

Focus on Cyber and Data Risk Management

• NFRA mandated stricter in-house risk identification processes.
• Enhanced management of technology risks, notably around off-site outsourcing.
• Regulatory reporting procedures were strengthened.

Accelerated Growth of Green Finance

• Green loans totaled 30.08 trillion yuan by end of 2023, marking a 36.5% increase from the previous year.
• The regulatory focus on green finance was further solidified.

Supportive Regulations

• State Council’s Implementation Opinions on Promoting the High-Quality Development of Inclusive Finance were issued.
• Central Financial Work Conference called for finance to support economic and social development.