Xi Jinping’s security commission to also tackle financial industry; Fears speculative foreign capital could threaten domestic stability one reason for top-level division within new National Security Commission

Xi Jinping’s security commission to also tackle financial industry

Tuesday, 28 January, 2014, 4:30am

George Chen and Teddy Ng

Fears speculative foreign capital could threaten domestic stability one reason for top-level division within new National Security Commission

Beijing will create a ministerial-level division dedicated to financial industry security within the new National Security Commission to be chaired by President Xi Jinping [1].

The move comes as the world’s number two economy is increasingly worried about speculative capital flows that may threaten domestic stability.

Xi’s vision of the NSC was expected to focus on “all kinds of emerging and new threats that the government hasn’t spent too much time and resources on yet”, a source said.

Financial industry security would fall into the “emerging threat” category.

“We do have several different departments to tackle financial security matters. For example, the State Administration of Foreign Exchange has been monitoring ‘hot money’ closely, and the Ministry of State Security has a team of experts to deal with related problems,” said a government source familiar with the situation. “But if we compare our efforts with some big Western countries, our leaders believe we still have a lot more to do with financial security, which is proving to be a serious threat not just to China but also to other countries amid the growing trend for economic globalisation.”

Shi Yinhong , an international relations professor at Renmin University, said representatives from the financial sector would be included in the NSC.

“Everything related to security of the nation will be the job of the committee, and this includes the financial aspect,” Shi said.

Premier Li Keqiang , who is mainly responsible for economic and financial affairs, is commission vice-president.

A minister-level position of “financial security commissioner” has also been created and will be filled by an official with experience in the financial industry.

The source cited two examples of how financial security could affect domestic social stability. One involved unusual price moves on the stock market.

Some government agencies had been collecting evidence and data in recent years to prove how speculative foreign capital – “hot money” – moved through the underground banking system, rocking the stock market and affecting local investors’ confidence in the mainland’s economic development.

Another case involved the virtual currency bitcoin, in which the mainland’s central bank has already banned [2] domestic financial institutions from trading.

Beijing is also worried the tapering off of the US Federal Reserve’s bond-buying programme may add pressure to monitor and control the pace of capital outflow.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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