China anti-corruption probe targets top banks, SOEs as Beijing races to defuse financial risks

The probe will target the China Investment Corp (CIC), China Development Bank and China Everbright Group, among others

Some 30 state-owned industrial giants, including China Mobile and PetroChina, were also put on the inspection list

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The investigation by the Central Commission for Discipline Inspection is the first since the new leadership team was inaugurated earlier this month. Photo: Robert Ng

Published: 8:15pm, 28 Mar 2023Updated: 9:32am, 29 Mar 2023

China’s top anti-corruption agency on Monday launched a new round of inspections into some of the nation’s leading financial institutions, in another indication of a coming regulatory storm.

The probe, together with a recently announced regulatory shake-up in financial oversight, shows the urgency with which China’s new leadership team is seeking to defuse risks, including those at ailing small banks, which are often associated with corruption.

Authorities are desperate to prevent financial contagion, rally financing support for economic recovery and tech innovation, and counter the spillover of international turbulence.

The move could exert more pressure on financial institutions already haunted by a rising number of bad assets against a backdrop of slowing economic growth and an overseas banking crisis.

The investigation by the Central Commission for Discipline Inspection is the first since the new leadership team was inaugurated earlier this month. The probe will target the China Investment Corp (CIC), China Development Bank, Agricultural Development Bank of China, China Everbright Group and People’s Insurance Company (Group) of China Limited.

Meanwhile, 30 state-owned industrial giants, including China Mobile and PetroChina, were also put on the inspection list, as authorities look for areas hindering “high-quality” development.

Li Xi, the Chinese leader heading the commission, said the newest round of inspections is to solve outstanding issues in the financial industry.

The emphasis on government agencies is vital to push forward reforms, improve existing systems and solve deep-seated contradictions, he was quoted as saying by the official Xinhua News Agency.

CIC, a US$1.35 trillion sovereign wealth fund, controls some of China’s largest commercial banks, insurers and securities brokerages, including 34.71 per cent stake in the Industrial and Commercial Bank of China, 64.02 per cent of the Bank of China, and 34.68 per cent of the China Development Bank through its subsidiary Central Huijin.