The China Banking and Insurance Regulatory Commission (CBIRC) issued the guiding opinion on promoting the healthy development of movable property and rights financing business and published measures that set out supervisory requirements, including the prudential measures, for "finance companies of enterprise groups." Additionally, publications from the People’s Bank of China (PBC) address cross-border financing of financial institutions and development of green finance.
Below are the key highlights of the recent updates:
- CBIRC issued the guiding opinion that proposes to intensify the financing services of movable property and rights, broaden the scope of collateral scientifically and rationally, provide support to the role of movable property and rights financing in weak areas, and strengthen the differentiated management of movable property and rights financing. The guiding opinion aims to support banking institutions to deepen innovation, improve quality and efficiency of accounts receivable financing services, optimize "commodity and cargo rights financing business," develop supply chain-based accounts receivable financing, inventory guarantee financing and other businesses, and actively develop systematic, all-scenario digital supply chain financial products. The guiding opinion stipulates that banking institutions should improve the risk management and control capabilities of movable property financing, strengthen the evaluation of movable property and rights value, and implement classified credit management.
- PBC, in collaboration with the State Administration of Foreign Exchange (SAFE) decided to raise the macro-prudential adjustment parameter for cross-border financing of enterprises and financial institutions from 1 to 1.25. The decision was taken to further improve the unified macro-prudential management of cross-border financing, expand the source of cross-border funds for enterprises and financial institutions, and guide them to optimize their liability structure.
- Another statement from PBC discusses the work underway for the development of green finance since 2016, which led to the formulation of the Guidelines for Building the Green Finance System; this system establishes the initial “five pillars” for green finance development: a green finance standards system, environmental information disclosure, incentive and constraint mechanisms, product and market systems, and international cooperation. Three functions of green finance—that is, resource allocation, risk prevention, and price discovery—are also highlighted. Going forward, PBC will accelerate steps to improve the interaction and combination between top-level design and primary-level practice to better support green and sustainable economic and social development as well as the transition to a low-carbon economy. PBC plans to consolidate the foundation for development of green finance, enhance ability of market entities to cope with climate risks, take active measures to develop transition finance, develop pilot zones for green finance reform and innovation, and make efforts to deepen international cooperation.
Keywords: Asia Pacific, China, Banking, Credit Risk, SAFE, Macro Prudential Policy, Cross Border Financing, Disclosures, Sustainable Finance, Climate Change Risk, Low Carbon Economy, Lending, Basel, CBIRC, PBC
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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