China Tightens Foreign Access to Financial Data

Experts: Stricter regulations may attempt to obscure Beijing's economic secrets

A man walks past a Bank of China booth at the Main Press Center at the 2022 Winter Olympics in Beijing, on January 28, 2022. Fabrice Coffrin/AFP via Getty Images

A Chinese banking watchdog is seeking to tighten its grip over financial data to avoid leaks to overseas banking supervisors. Financial experts believe this is part of the Chinese Communist Party’s (CCP’s) effort to cover up its economic secrets and the corruption of senior officials.

On Nov. 11, the China Banking and Insurance Regulatory Commission (CBIRC) issued a “draft request for comments” on amendments to the Banking Supervision and Regulation Act. The amendments increase restrictions on access to financial data, reported state-run media The Paper.

The restrictions apply to financial institutions, which are forbidden to provide business-related documents, information, or data outside of China without authorization. They also apply to foreign banking supervisors, who are not allowed to conduct investigations and collect evidence in China without the consent of authorities.

The top banking regulator said the amended act is expected to expand to 92 articles from the previous 52 articles. 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,” said Zheng Zhicheng (pseudonym), an economics professor living in China. Zheng spoke to The Epoch Times on Nov. 15.

Although regulators claimed the stricter regulations are motivated by national security considerations, Zheng 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.”

Tightened Regulations May Obscure Internal Dealings

The new regulations may provide cover for some senior officials who have deep ties to offshore companies, Zheng said.

As an example, Zheng cited a Chinese company’s suspected acquisition of a Ukrainian aircraft engine manufacturer. The case was exposed in 2021 as part of the “Pandora Papers,” a trove of  11 million leaked documents released by the 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 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,” Zheng said.

“But the company is just a white glove of the CCP: 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,” Zheng added.

Layers of Secrets

There may be more to hide. 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 policy. It is now restricting banks from providing data and documents for fear that its struggling economy, economic corruption, and illegal practices will be exposed.

According to Zhang, “Many banks have certain bad debts and some ‘gray’ things, which may be fine for the banks to keep or archive. But for communist governments, it is a must to prevent leaks or exposure.”

Revealed banking data and documents would contain the names and accounts of corrupt officials and their families, every attempt to transfer or conceal family assets overseas, any traces of misappropriating public funds or state capital, and more.

“Out of the ruling party’s interest, high echelons would not feel secure if overseas agencies had evidence of bribery, fraud, or other crimes [committed by] its cadres,” Zhang said.