Xi Jinping Leads Push For Communist Principles In China's Financial Sector Amid Economic Challenges

China’s top financial regulators have vowed to enforce Communist Party principles in the finance sector, emphasizing the importance of serving the economy while avoiding excessive risks.

What Happened: The regulators have pledged to maintain strict supervision to ensure the financial sector aligns with Communist Party values. They have also urged market players to adopt a responsible approach to business, performance, and risk, and to avoid taking on excessive risks, according to the party’s official newspaper, reported Reuters.

Chinese President Xi Jinping has expressed discontent with the $63 trillion financial sector, implementing measures during his third term to enhance the party’s influence in shaping its direction. This includes establishing party entities like the Central Financial Commission.

“The financial powerhouse we want to build is a socialist financial powerhouse under the leadership of the Chinese Communist Party,” an article published in the People’s Daily, the party’s top financial policy body and ideology taskforce made a statement.

This announcement comes amid concerns over the stability of China’s financial sector. Despite the country meeting its growth target of around 5% in the previous year, analysts have warned that without market-oriented reforms, the economy could slow to approximately 3% annually, a rate that would feel like an economic recession.

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The regulators’ statement coincides with ongoing efforts by the Chinese government to address the challenges facing the country’s economy.

In 2022, Xi Jinping outlined a vision for “Chinese-style modernization,” aiming to double the economy by 2035. Government economists suggest this target requires an average annual growth rate of 4.7%.

Why It Matters: The Chinese economy has been facing significant challenges, including a $7 trillion stock decline, real estate defaults, and internal economic pressures. These issues have prompted calls for decisive action to restore investor confidence and prevent further damage to consumer trust.

Earlier this month, an analyst warned that the woes in the Chinese market were far from over, stressing the need for urgent action to address the country’s economic challenges.

China’s economy has been facing challenges, as evidenced by Premier Li Qiang‘s recent call for “pragmatic and forceful” measures to boost confidence in the economy. This directive from the financial watchdogs aligns with the government’s efforts to stabilize the financial sector and prevent potential economic downturns,

Against this backdrop, the recent pledge by China’s financial regulators to uphold Communist Party values and ensure responsible financial practices reflects the government’s determination to address the economic uncertainties facing the country.

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