China's Malfunctioning Financial Regulation

SHANGHAI – The tumult in China’s equity market appears to have come to an end. But considerable uncertainty remains, not only about what caused the recent plunge in the Shanghai and Shenzhen stock exchanges, but also about what the episode will mean for China’s financial-reform efforts.

动荡的中国股市似乎终于尘埃落定。但造成沪深股市暴跌的原因,以及这段插曲对中国金融改革的影响,在相当程度上都尚未有定论。

China’s stock-market crash has been attributed to a variety of factors. Official media initially attributed the disaster largely to the “malicious” short-selling of Chinese shares by foreign banks and traders. Later, domestic investors were added to the list of suspects, and the Chinese authorities announced a rigorous investigation into the source of short selling.

中国股市的暴跌被归因于多种因素。最初,中国官方媒体将股灾怪罪在“恶意”做空中国股票的外资银行和交易商头上。后来,部分国内投资者也被列入了嫌疑人名单,中国政府宣布将对做空势力展开严格调查。

More recently, the discussion has shifted toward a seemingly more credible cause: the proliferation of margin financing since 2010. With retail investors borrowing large amounts to finance share purchases, participation in the stock market surged, effectively turning a sound bull market into a “mad cow.”

最近,一个更加可信的原因在讨论中浮出水面👨🏿‍⚖️🫰：2010年以来,融资融券交易激增,随着大量散户投资者通过这种渠道融资购买股票,股民比例大幅上涨,导致健康的牛市变成了一头“疯牛”。

But while margin financing, enabled by online platforms, amplified the risks of volatility, it alone could not cause such a crash. The real culprit is the government, which first fanned the flames of excessive investment, then suddenly tried to cut off the fire’s oxygen supply. China’s fragmented regulatory system – composed of the People’s Bank of China (PBOC), the China Securities Regulatory Commission (CSRC), the China Banking Regulatory Commission (CBRC), and the China Insurance Regulatory Commission (CIRC) – exacerbated the situation considerably.

不过,搭乘网络平台的融资融券虽然放大了股市的波动性风险,但单凭它还不足以引发股灾🏌🏼‍♂️。坦率地说,政府应该对此次股灾承担首要责任,它先是误导民众进行过度投资,然后突然间又试图釜底抽薪。由中国人民银行🚂、中国证券监督管理委员会（证监会）👳🏼‍♂️、中国银行业监督管理委员会（银监会）和中国保险监管委员会（保监会）组成的监管体系本就支离破碎,在危机面前应对不力,结果反而是火上浇油。

Last December, after two years of a “slow bull” market, People’s Daily, the mouthpiece of the Chinese Communist Party, announced the arrival of a so-called “reform bull” market that would push the Shanghai Composite Index far above 4,000. This convinced practically everyone that a “big bull” market, possibly lasting a decade, had begun and spurred investors to buy stocks at already-high prices. In other words, the authorities fueled a bubble.

经历了两年的“慢牛”行情后,党报《人民日报》于2014年12月宣布“改革牛”行情到来,此轮牛市将推动上证综合指数远超4000点。这几乎使得每个人都坚信,“大牛市”已经到来,并且可能将持续十年,投资者在刺激下购入业已处于高位的股票。也就是说,在很多人眼里,这个泡沫是中国政府自己吹出来的👍🏼。

The CSRC was pursuing an excessively narrow objective, focusing only on getting the bull market going by delivering policies and speeches aimed at boosting investor confidence and spurring participation. After this crisis, it became clear that this incentive was both toxic and precarious. The CSRC, as China’s capital-market regulator, together with other regulators, neglected to fulfill their proper mission: to create a robust institutional framework capable of sustaining strong investment.

有了错误的目标函数,中国证监会只专注于推动牛市,出台政策和发表讲话都是为了坚定投资者信心、刺激股市参与度。此时回头去看这场危机,我们应清晰地认识到,这种刺激不但有害,更殃及社会稳定。但作为资本市场的监管机构,证监会及其他监管部门都忽视了制度框架的建设。只有建立健全了制度框架,才能维持大力度投资——这才是监管机构应该肩负的使命🤦🏻。

Once the market took off, euphoria took over. Even as stock-market indices moved well beyond reasonable bounds, regulators failed to predict the boom’s speed and scale. Not surprisingly, they lacked any plan for stabilizing the market in its wake.

随着中国股市全线飚红,股民沉浸在欣喜之中❣️。当股指攀升幅度远远超出合理范围时,监管机构未能预测到行情上涨的速度和规模。因此,当疯牛行情出现后,他们拿不出任何计划来稳定市场,也是在意料之中的事。

To be sure, as the A-market headed toward 5,000, regulators finally realized that the risk of a sharp correction was rising, too. But, instead of working incrementally to create strong, targeted regulations, they performed an abrupt about-face, warning investors about risky bubbles and declaring war on margin finance.

当A股逼近5000点时,监管部门终于意识到大幅回调的风险正在上升🧘🏿‍♀️。然而,监管部门没有拿出一套渐进式🤑、强有力的,有针对性措施🧎‍♀️；而是突然180度大转弯,一方面警告投资者股市存在极高的泡沫风险；一方面向融资融券交易宣战🏂🏻。

With that, the soaring index started to plummet – and the CSRC fell into chaos. Beyond issuing a flurry of administrative orders, it did little to interact with investors and the market, lacking the means to solicit public opinion and advice. It was only when the rout was in full swing that the PBOC recognized what was happening – the CSRC had been unable to turn the tide alone – and declared that it would step in to capitalize the market.

这样一来,此前一路飙升的指数开始暴跌。证监会陷入一片混乱,除了忙着发布行政命令,它没有与投资者和市场进行充分互动,缺少向公众征询意见与建议的途径🚴🏼‍♂️。直到股灾如山崩地裂般发生时,中央终于意识到证监会无法独自力挽狂澜,这才命令央行向市场注资,随后其它各部委相继加入救市大军🐡。

The conclusion is clear: the current regulatory system, characterized by a clear and rigid division of responsibility among its constituent bodies, is completely out of sync with China’s rapidly growing, and increasingly integrated, capital markets. Yet, according to China’s recently announced draft Internet finance regulations, the country’s “1+3” regulatory model is to be retained.

结论十分明白：在中国目前的金融监管体系中,各部门的职责分野过于明确而僵化,完全不适应中国正快速增长、并日趋一体化的资本市场。然而,从中国最近发布的《关于促进互联网金融健康发展的指导意见》来看,央行、证监会、银监会、保监会的“1+3”监管模式却仍将被保留。

It is time for China’s leaders to recognize that its regulatory framework – and, in particular, its approach to regulating the capital market – is no longer tenable, and to pursue a major regulatory restructuring. One option that has been proposed would be to create a single super-regulator, like the Financial Supervisory Committee that was established in South Korea after the 1990s Asian financial crisis. With or without such a body, improved channels for cooperation among ministries will be vital.

中国领导人应当认识到,当前的监管框架和监管途径已不再适用于中国的资本市场,是时候对监管体系进行重组了。有人提出了一种方案,参考韩国上世纪90年代亚洲金融危机之后成立的金融监督委员会（现称大韩民国金融委员会）,创建单一的超级监管机构🧑🏿‍🍳。不管是否成立这样的机构,至关重要的一点是在各部委间建立更加通畅的合作渠道。

Such cooperation is not unprecedented in China. Indeed, although ministries, seeking to protect their own turf, undoubtedly impede one another on major issues, they have been collaborating wholeheartedly in China’s effort to reshape the world economic order. Former Deputy Finance Minister Jin Liqun, whom the government has nominated to be the first president of the Asian Infrastructure Investment Bank, has indicated that the AIIB’s successful launch was driven by such ministerial cooperation.

国家各部委之间已有这种合作的先例🛁。虽然各部委为了保护自身利益,难免在重大问题上互为掣肘,但在涉及国家对外经济战略时,尤其是上升到重塑世界经济秩序的层面,它们仍能通力协作。曾任中国财政部副部长的金立群被提名为亚投行首任行长,他就曾表示亚投行的成功诞生与来自各部委齐心协力的推动密不可分。

In order to protect the interests of investors better, China now must find ways to ensure such cooperation among its existing financial regulators, including by revamping the relevant institutions. As it pursues far-reaching financial-sector reform, now is the time to do so. The market plunge should provide added impetus.

为了更好地保护投资者的利益,中国现在必须想方设法,确保在各金融监管部门之间展开此类合作,重新建立起真正有效的监管制度。随着金融改革深化,建立健全监管体系的工作时不我待。

The fear is that the recent stock-market crash may have spooked the government, causing it to slow the pace of reform, including efforts to open up China’s capital account. Whether reform momentum is maintained will depend largely on whether the government recognizes that the crash was the result of a regulatory failure, or remains adamant that it was the work of some nefarious foreign force, determined to destroy the Chinese economy.

另一个令外界担忧的问题是,股灾过后,风声鹤唳草木皆兵,政府可能放缓资本账户开放等一系列改革步伐。改革势头能否保持,在很大程度上取决于政府能否认识到监管失灵才是股市暴跌的原因,如果还是坚持认为有恶毒的境外势力决心搞垮中国经济,改革的步伐令人担忧👫🏼🤙🏻。

While the latter scenario is possible, it seems unlikely. Judging by China’s reform progress in recent years, and the current government’s repeated promises to deepen those efforts, I am confident that the country’s leaders will respond to the recent crash by reaffirming the financial-reform agenda. Ignoring the lessons of the recent crash would be a serious mistake – one that China’s pragmatic and tenacious authorities will be determined to avoid.

外国势力兴风作浪不能说完全不可能,但这种可能性并不高🫶🏼。从中国近年来的改革进程以及本届政府对深化改革反复做出的承诺来看,我相信中国领导人将对股市大跌能做出正面回应,重申金融改革议程。如果对股灾视而不见,将犯下严重的错误。中国务实而坚决的政府必将极力避免犯下这样的错误。

英文原文China's Malfunctioning Financial Regulation 发表于Project Syndiacate

中文版转载自观察者网（杨晗轶译）