Banking regulation in China: what, why, and how?

Purpose - The purpose of this paper is to provide an overview of China's contemporary banking regulatory system, with particular focus on regulatory control of foreign banks trading in China. The paper addresses three aspects of Chinese banking regulation: what does China regulate; why does China regulate; and how does China regulate. Much of the discussion is concerned with China's regulatory agencies particularly with the role of the CBRC as the principal regulator in China's banking sector. Design/methodology/approach - In the first instance the paper presents an overview of banking regulatory models gained from a review of theoretical literature in the area. Then through a wide ranging review of Chinese publications, both academic and official, the paper seeks to relate the course of regulatory reform in China, both in terms of compliance with orthodox regulatory theory, and the unique regulatory requirements of the Chinese banking system. Findings - The paper recognises that China has embraced the need for banking regulation with the establishment of an institutional structure that is responsive to both banking supervision and government policy. Within that structure the role of the CBRC, the pervasive manner in which that agency operates, and the content of its regulatory output have been identified and critically reviewed. Originality/value - In its review of the modernization of China's banking regulatory system, the paper achieves originality from the author's research into, and critical reflections on Chinese generated literature, both institutional and academic, which is then communicated in a manner that will be understood by readers familiar with Western banking regulatory theory.