China to step up financial oversight, tackle risks as sector faces structural changes

China will intensify financial oversight, strengthen early risk detection, and accelerate regulatory reforms as changing market structures and emerging financial activities pose new challenges to its banking and insurance sectors, the country's top financial regulator said.

Ding Xiangqun, minister of the National Financial Regulatory Administration, made the remarks on Monday at the Annual Conference of Financial Street Forum 2026, outlining priorities that include resolving risks at high-risk institutions, closing regulatory gaps, tightening enforcement, and directing financial resources toward the real economy.

China's banking and insurance sectors remain broadly stable, with large institutions operating on a sound footing and efforts to reform and mitigate risks at smaller institutions progressing in an orderly manner. Overall financial risks remain under control, Ding said.

Regulators must adopt a more forward-looking and targeted approach to risk prevention, focusing on key areas and taking the initiative in addressing vulnerabilities, Ding said. Measures should include improving risk-resolution mechanisms, expanding resources for risk mitigation, and using mergers, restructuring, and market exits to deal prudently with high-risk institutions.

She also called for stronger coordination among regulators to eliminate gaps in oversight and crack down on illegal financial activities. Supervision should cover cross-regional and cross-departmental activities, as well as financial services involving new business models and products. All financial activities should be brought within the regulatory framework, she said.

China has accelerated the development of its financial legal framework in recent years, making significant progress in the enactment and revision of legislation, including financial law, banking supervision law, and insurance law. Regulatory rules and systems are also being refined, Ding said.

Authorities should address remaining weaknesses in the regulatory framework, taking into account the differing risk profiles and oversight needs of financial institutions, as well as emerging challenges involving partnerships with third parties and cybersecurity.

Regulators must also hold the key individuals and parties responsible for major financial risks accountable, strengthen enforcement, and increase the deterrent effect of penalties, she said.

As the financial sector's operating environment, institutional structure, and risk patterns undergo profound changes, regulators must upgrade their capabilities and methods, Ding said. Priorities include strengthening risk prevention at the source, improving monitoring and early-warning mechanisms, refining risk-based and tiered supervision, and implementing mandatory early corrective measures.

Authorities should also tighten oversight of shareholder conduct and senior executives, with closer scrutiny of related-party transactions, large investments, and credit exposures. Greater use of technology should accelerate the sector's digital and intelligent transformation, broaden the regulatory toolkit, and improve the effectiveness of supervision.

Alongside tighter oversight, China will push ahead with financial sector reform and transformation to strengthen support for high-quality economic development, Ding said.

With a broad range of financial institutions operating in the country, regulators should encourage differentiated business strategies and greater complementarity. Authorities will work to improve differentiated assessment and evaluation systems, guide institutions toward areas where they have comparative strengths, and promote the consolidation and quality improvement of small and medium-sized institutions in line with local conditions.

Regulators will also step up efforts to maintain market order, discourage institutions from pursuing scale at the expense of sound business practices, crack down on non-compliant marketing, and take tougher action against illicit and gray-market activities in the financial sector.

The aim is to establish clear boundaries for market competition and reinforce standards for responsible business operations, Ding said.

Financial services should also be better aligned with the needs of the real economy. Regulators will advance the development of the five major areas of finance — technology finance, green finance, inclusive finance, pension finance, and digital finance — and guide capital toward areas that support economic restructuring and transformation.

Support will be strengthened for the development of new quality productive forces, including the expansion and upgrading of advanced manufacturing and the improvement of capacity and quality in the services sector.

Financial institutions will also be encouraged to increase support for infrastructure projects, helping major projects generate broader economic benefits.

Meanwhile, China will continue opening its financial sector to foreign participation, promoting fair competition, constructive engagement, and mutually beneficial cooperation between domestic and foreign-funded institutions, Ding said.

Authorities will advance institutional opening-up measures, encourage more foreign financial institutions and long-term capital to establish and expand operations in China, and respond promptly to the concerns of foreign investors. Regulators will also continue refining rules and maintaining a fair, transparent, and stable policy environment.

Foreign institutions will be encouraged to draw on their comparative advantages in wealth management, pension and healthcare services, and green finance, and to participate in a wider range of pilot programs.

China has consistently supported multilateralism and actively participated in the work of international financial organizations. It has signed regulatory cooperation agreements with financial supervisory authorities in 90 countries and regions, Ding said.

Addressing global financial risks requires stronger dialogue, consultation and practical cooperation, she said. Regulators should anticipate challenges arising from emerging technologies — including artificial intelligence — and help develop supervisory standards and rules for emerging areas such as digital finance.

China should also strengthen cross-border risk monitoring and early-warning mechanisms, support reforms to international financial governance, and work toward a global governance framework that is more equitable, open, and inclusive, Ding said.

Chinese financial institutions, meanwhile, should continue improving their cross-border service capabilities and efficiency, deepen cooperation with foreign institutions in trade, investment, technology, and other fields, and work together to safeguard the stability and smooth operation of global industrial and supply chains, she said.