VZCZCXRO2834
PP RUEHCN RUEHGH RUEHVC
DE RUEHBJ #0461/01 0191307
ZNR UUUUU ZZH
P 191307Z JAN 07
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 4001
INFO RUEHOO/CHINA POSTS COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEHGV/USMISSION GENEVA PRIORITY 1560

UNCLAS SECTION 01 OF 02 BEIJING 000461 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/CM 
USDOC FOR DAS LEVINE AND ITA/MAC/AP/MCQUEEN 
TREASURY FOR OASIA/ISA CUSHMAN AND DOHNER 
STATE PASS FEDERAL RESERVE BOARD; SAN FRANCISCO FRB FOR 
CURRAN; NEW YORK FRB FOR DAGES/CLARK 
STATE PASS USTR STRATFORD/WINTER/MCMARTIN 
 
E.O. 12958: N/A 
TAGS: ECON EFIN
SUBJECT: TOPICS OF CHINA'S JANUARY 19-20 NATIONAL FINANCIAL 
WORKING CONFERENCE 
 
 
 THIS MESSAGE IS SENSITIVE BUT UNCLASSIFIED.  PLEASE HANDLE 
ACCORDINGLY.  NOT FOR DISTRIBUTION OUTSIDE USG CHANNELS. 
 
¶1. (SBU) Summary: China's National Financial Working 
Conference, to be attended by Premier Wen Jiabao and members 
of the Politburo, will be held on January 19-20, and focus on 
advancing financial reforms, particularly in the rural 
sector.  This event, which takes place once every five years, 
will set the agenda for restructuring the financial sector. 
According to press and multinational investment banks' 
reports, major topics will likely include reform of the 
supervision of corporate bond issuance, creation of a 
coordinating system for financial regulatory work, 
establishment of an investment company to manage China's 
foreign exchange reserves, and reform of the Agricultural 
Bank of China (ABC), China Development Bank (CDB), and 
China's Import and Export Bank.  Moreover, the conference 
might discuss turning four asset management companies, which 
were established in 1997 to deal with the non-performing 
loans (NPLs) of the four main state-owned banks, into 
commercial financial institutions.  A China Securities 
Regulatory Commission (CSRC) Director-General told emboffs 
January 12 that bond market development will be a major 
topic.  CITIC Securities' Senior Vice President on January 10 
told emboffs that the conference might discuss creating a 
company, separate from the State-Owned Assets Supervision and 
Administration Committee (SASAC), to manage state-owned 
financial assets.  End Summary. 
 
Press Reports and Investment Banks Report on Likely Financial 
Reforms 
------------------------------- 
 
¶2. (SBU) According to January 16 press reports, the National 
Financial Working Conference, which will be held January 
19-20, will focus on fixing the financial system in the rural 
sector.  According to local and international press reports 
and multinational investment banks' informed speculation, 
major topics will include the establishment of: (1) an 
investment company (or redefinition of Huijin Holding 
Company's role) to manage China's foreign reserves, (2) a 
centralized entity to invest in state-owned financial assets, 
and (3) a system to coordinate the financial regulatory work 
of the People's Bank of China (PBOC), China Banking 
Regulatory Commission (CBRC), China Securities Regulatory 
Commission (CSRC), China Insurance Regulatory Commission 
(CIRC), the National Development and Reform Commission 
(NDRC), and the Ministry of Finance (MOF).  Reform of the 
Agricultural Bank of China (ABC), China Development Bank 
(CDB), and China's Import and Export Bank are also likely 
topics.  HSBC speculates that the conference will discuss 
turning major asset management companies, which were 
established in 1997 to deal with the non-performing loans 
(NPLs) of the four main state-owned banks, of Xinda, 
Changcheng, Huarong, and Dongfang, into commercial financial 
institutions. 
 
CSRC: Bond Market Development, Strengthening Implementation 
of Supervisory Laws are Topics 
------------------------------ 
 
¶3. (SBU) Sun Jie, Director-General of CSRC's Department of 
Fund Supervision, told emboffs on January 12 that bond market 
development will definitely be one of the major issues of 
discussion at the National Financial Working Conference.  The 
conference will encourage asset management companies to be 
larger players in the market.  Sun noted that the CSRC 
Chairman will present regulations to strengthen 
implementation of the existing security regulatory laws.  Sun 
added that he himself had proposed these regulations to the 
Chairman. 
 
CITIC: Management of State-Owned Financial Assets Likely 
Topic as Well 
------------------------------ 
 
¶4. (SBU) Gene Ma, Senior Vice President of CITIC Securities' 
Research Department, told emboffs on January 10 that the 
conference would also probably discuss creating a company, 
separate from SASAC, to manage state-owned financial assets. 
Ma said that in the fall of 2006, some of his friends were 
 
BEIJING 00000461  002 OF 002 
 
 
working on policy papers for the National Financial 
Conference and were sequestered without phone access until 
the papers were drafted. 
RANDT