China’s top banking watchdog is tightening its grip on financial data sharing. The agency says it’s “to avoid leaks to overseas banking supervisors.” Financial experts weighing in on the recent move believe this is part of the Chinese Communist Party’s (CCP) efforts to keep a lid on economic secrets and further conceal evidence of corruption among senior Communist Party officials.
On Nov. 11, the China Banking and Insurance Regulatory Commission (CBIRC) issued a “request for comments draft” on amendments to China’s Banking Supervision and Regulation Act. The new amendments include measures to beef up restrictions making it more difficult to access financial data, according to the new state-run media The Paper.
The proposed changes would forbid financial institutions from sharing business-related documents, information, or data outside of China without authorization. The new measures are also intended to apply to foreign banking supervisors, making it illegal to conduct investigations and collect evidence in China without the consent of mainland Chinese authorities.
The effect appears to limit data mining of mainland China’s internal financial activities by non-Chinese organizations.
The top banking regulator said the amended act is expected to expand to 92 articles from the previous 52. The act first came into effect in February 2004.
“CBIRC’s so-called ‘proposing to revise banking regulation’ is just a formality, while its key steps might have already been accomplished,” according to Chinese resident and economics professor Zheng Zhicheng (pseudonym) during an interview with The Epoch Times on Nov. 15.
Zhicheng is alluding to the CBIRC’s proposed amendments serving as an after-the-fact cover-up of senior officials’ criminal activities, saying the actual goal is to conceal evidence of the misuse and theft of public funds.
Although CBIRC regulators cite “national security” as the basis for stricter sharing protocols, Zhicheng sees the move as an attempt by the CCP to “tighten control over big data, including dominating the right to own and publish all data and information.”
Regulations Intended to Obscure CCP’s Foreign Deals
According to Zhicheng, the new regulations afford protections to the CCP’s senior officials by obscuring ties to offshore companies outside of China.
The economics professor cited the acquisition of Ukrainian aircraft engine manufacturer Motor Sich by a Chinese company. The case was exposed in 2021 as part of the “Pandora Papers,” a trove of 11 million leaked documents released by the Washington, D.C.-based International Consortium of Investigative Journalists.
The Chinese company, Beijing Skyrizon Aviation Industry Investment Co., was subsequently added to the U.S. Commerce Department’s military end user list for its alleged ties to the Chinese military. The list identifies foreign entities that “represent an unacceptable risk of use in or diversion to a ‘military end use’ or ‘military end user’ in China, Russia, or Venezuela.”
In its announcement, the U.S. government said Beijing Skyrizon was “actively seeking to acquire intellectual property and technology to advance key military capabilities that threaten U.S. national security.”
“This is definitely a sort of CCP-style operation, using offshore companies to secretly acquire overseas military enterprises,” Zhicheng said, adding that “the company is just the CCP’s white glove: the involved bank’s actual operation should remain a secret from the public, and the data is even more sensitive—that is why the CCP will strengthen its supervision.”
Many Layers, Many Secrets
Financial commentator Zhang Jinglun, speaking with The Epoch Times on Nov. 15, said that the Chinese regime does not want to confirm what the world suspects: that China’s economy suffered a devastating blow due to its zero-COVID policies. It is now restricting banks from providing data and documentation, fearing that its struggling economy, economic corruption, and illegal practices will be exposed.
According to Jinglun, “Many banks have certain bad debts and some ‘gray’ areas, which may be fine for the banks to keep or archive. But for communist governments, it is a must to prevent leaks or exposure.”
If revealed, the banking data and documents would expose names and accounts, incriminating corrupt officials and their families. This would include attempts to transfer or conceal CCP officials’ family assets overseas, any and all traces of misappropriating public funds or state capital, and more.
Jinglun summarizes the necessity for the new regulations’ lack of transparency: “Out of the ruling party’s interest, the upper echelons would not feel secure if overseas agencies had evidence of bribery, fraud, or other crimes [committed by] its cadres.”