– Jiang Bixin (江必新), former vice chairman of the NPC Constitution and Law Committee, advocates for a fundamental overhaul of China’s financial regulatory system, warning against a fragmented approach akin to ‘railway police, each managing their own section.’
– He proposes four key transformations: shifting from public power reliance to market self-control, from collateral dependence to credit-based precision, from coercive repayment to market incentives, and from front-end approval to whole-process, penetrative monitoring.
– These changes align with the 2025 Central Financial Work Conference’s core themes of risk prevention, strong supervision, and high-quality development, emphasizing technology and legal frameworks as enablers.
– Successful implementation requires coordinated efforts across legislation, enforcement, judiciary, and industry self-regulation to build a modern financial rule of law that supports实体经济 (real economy) growth.
At the 2026 Changbai Mountain Forum in Jilin Province, a gathering focused on ‘investment empowerment and cultural-tourism symbiosis,’ a stark message on financial reform resonated through the halls. Former senior legislative official Jiang Bixin (江必新) addressed the urgent need to evolve China’s regulatory paradigm, emphasizing that in today’s complex risk landscape, **financial supervision cannot be like ‘railway police, each managing their own section’**. His speech, anchored in the directives of the 2025 Central Financial Work Conference, outlined a comprehensive roadmap for transitioning from reactive administrative control to proactive, integrated governance. For global investors and market participants, this signals a pivotal shift toward more resilient and efficient capital markets, where holistic oversight prevents systemic vulnerabilities and fosters sustainable investment opportunities.
The Imperative for Change: Aligning with National Financial Goals
Jiang Bixin’s remarks were delivered against the backdrop of China’s ongoing efforts to balance economic growth with financial stability. The 2025 Central Financial Work Conference, a key policy-setting event, established ‘防风险、强监管、促高质量发展’ (preventing risks, strengthening supervision, and promoting high-quality development) as the overarching theme. This sets the stage for the four transformations he detailed, which are designed to move the system away from siloed oversight—where **financial supervision cannot be like ‘railway police, each managing their own section’**—toward a cohesive framework.
Context from the 2025 Central Financial Work Conference
The conference highlighted priorities such as enhancing监管协同 (regulatory coordination) and leveraging technology for smarter oversight. Jiang Bixin’s analysis builds on this by stressing that traditional治理模式 (governance models) are ill-suited for modern challenges like shadow banking risks or digital finance complexities. His call for a法治治理 (rule-of-law governance) paradigm reflects a broader trend of China deepening its financial market reforms to attract international capital while safeguarding domestic interests.
Transformation One: Empowering Market Entities Over Public Power
The first shift involves moving from over-reliance on公权力 (public power) to strengthening市场主体风险自控 (market entities’ risk self-control). Jiang Bixin emphasized that regulators must transition from being ‘风险兜底者’ (risk backstoppers) to ‘规则守护者’ (rule guardians), focusing on behavior-based supervision rather than implicit guarantees.
Compacting Responsibilities for Risk Self-Control
Core to this is ‘压实责任’ (compacting responsibilities), ensuring institutions operate as truly autonomous entities that ‘自主经营、自担风险、自我约束’ (independently operate, bear risks, and self-discipline). Practical steps include:
– Enhancing corporate governance frameworks to align executive incentives with long-term stability.
– Strengthening internal control mechanisms through regular audits and compliance checks.
– Implementing strict监管问责 (regulatory accountability) to penalize misconduct, thereby building the first line of defense against financial shocks. This approach reduces moral hazard and encourages prudent risk management, moving beyond the fragmented oversight where **financial supervision cannot be like ‘railway police, each managing their own section’**.
Transformation Two: Building Credit Systems Over Collateral Dependence
Jiang Bixin pointed out that金融的本质是信用 (the essence of finance is credit), and serving the实体经济 (real economy) is its core duty. The second transformation advocates for developing以信用为基础的精准授信 (credit-based precise credit granting) instead of over-relying on强制性担保 (compulsory guarantees). This shift aims to optimize resource allocation, particularly for sectors highlighted in China’s ‘五篇大文章’ (five major articles) like科技金融 (tech finance) and绿色金融 (green finance).
Technology as the Catalyst for Precision Finance
To achieve this, he called for leveraging大数据、人工智能 (big data, artificial intelligence) to construct a全国统一的征信体系 (nationwide unified credit system). Benefits include:– Enabling金融机构 (financial institutions) to assess borrowers based on信用历史 (credit history) rather than抵押物 (collateral), improving access for中小微企业 (SMEs).
– Facilitating ‘精准滴灌’ (precision drip irrigation) of funds to priority areas, reducing wasteful lending and speculative bubbles.
– Enhancing risk pricing models, which can lower融资成本 (financing costs) for creditworthy entities. For instance, platforms like中国人民银行 (People’s Bank of China)’s credit registry could be integrated with private-sector data to provide a holistic view, moving away from disjointed assessments that resemble **financial supervision cannot be like ‘railway police, each managing their own section’**.
Transformation Three: Fostering Incentives Over Coercion
The third transformation focuses on shifting from依赖政法机关强制还本付息 (relying on political and legal organs to force repayment) to building市场化、法治化的激励机制 (market-based, legal incentive mechanisms). Jiang Bixin argued that financial objectives are better achieved through事前引导 (ex-ante guidance) rather than事后强制 (ex-post coercion), promoting a culture of voluntary compliance.
Developing Market-Based Dispute Resolution
Key initiatives involve:
– 健全守信联合激励和失信联合惩戒机制 (improving joint incentive mechanisms for trustworthiness and joint disciplinary mechanisms for dishonesty), where entities with good信用记录 (credit records) gain advantages in融资 (financing) and市场准入 (market access).
– 大力发展多元化的金融纠纷化解机制 (vigorously developing diversified financial dispute resolution mechanisms), such as arbitration and mediation centers, to handle conflicts efficiently without overburdening courts.
– Introducing市场化违约处置工具 (market-based default处置 tools) like debt-to-equity swaps or asset securitization, which can enhance风险化解效率 (risk resolution efficiency). This proactive stance contrasts with reactive enforcement that fragments oversight, underscoring why **financial supervision cannot be like ‘railway police, each managing their own section’**.
Transformation Four: Implementing Holistic, Penetrative Monitoring
Jiang Bixin’s fourth and perhaps most critical transformation addresses the need to move from高度重视前端预判审批 (over-emphasizing front-end pre-judgment approval) to强化对资金使用的全流程、穿透式监控 (strengthening whole-process, penetrative monitoring of fund usage). He starkly warned that **financial supervision cannot be like ‘railway police, each managing their own section’**, where regulators focus only on their narrow segments without tracking the entire lifecycle of capital flows.Leveraging Tech for Real-Time Fund Tracking
This requires deploying科技手段 (technological means) to build智慧监管平台 (smart regulatory platforms) for实时动态跟踪 (real-time dynamic tracking). Examples include:
– Using blockchain or AI analytics to monitor资金流向 (fund flows) from issuance to回收 (recovery), ensuring they定向 (direct) toward strategic sectors like manufacturing or innovation.
– Preventing资金空转套利 (fund idling and arbitrage) or违规挪用 (misappropriation) by setting up alerts for anomalous transactions.
– Enhancing跨部门数据共享 (cross-departmental data sharing) between regulators like中国证监会 (China Securities Regulatory Commission) and国家金融监督管理总局 (National Financial Regulatory Administration) to close监管真空 (regulatory vacuums). For further insights, refer to official announcements on financial technology integration from Chinese authorities.
The Path Forward: Coordinated Implementation for Lasting Impact
Jiang Bixin concluded that these ‘四个转变’ (four transformations) are interconnected, forming a new paradigm from ‘行政管制’ (administrative control) to ‘法治治理’ (rule-of-law governance). He stressed that next steps demand协同发力 (coordinated efforts) across multiple domains to ensure that **financial supervision cannot be like ‘railway police, each managing their own section’** becomes a reality.
Key Action Areas for Stakeholders
– Legislation: Accelerating重点领域立法修法 (legislation and revision in key areas), such as updating the商业银行法 (Commercial Bank Law) to embed risk self-control principles.
– Enforcement: Strengthening监管协同与科技赋能 (regulatory coordination and tech empowerment) to reduce overlaps and gaps.
– Judiciary: Perfecting金融司法专业化审判体系 (specialized financial judicial审判 systems) to handle complex cases with expertise.
– Industry Self-Regulation: Stimulating行业协会和市场主体自治活力 (industry association and market entity self-governance vitality) through guidelines and best practices. International investors should monitor these developments closely, as they will influence market accessibility and risk profiles.
Jiang Bixin’s blueprint offers a clear vision for transforming China’s financial landscape into one that is more integrated, efficient, and resilient. By moving beyond fragmented oversight, these reforms aim to create a robust environment where capital flows smoothly to productive uses, mitigating systemic risks and supporting long-term growth. For institutional players and corporate executives, the takeaway is unambiguous: adapt to this evolving regulatory ethos, invest in compliance and credit infrastructure, and engage with policymakers to shape the future. As China continues to open its markets, embracing this holistic approach will be crucial for unlocking value and navigating the complexities of the world’s second-largest economy. Stay informed through reputable sources and consider how these shifts impact your investment strategies in Chinese equities.