CHINA’S financial regulator said it will implement a series of measures to shore up the nation’s smaller banks and insurers while continuing a clampdown on shadow financing and property speculation.

The regulator will introduce measures to eliminate bad loans and promote mergers, capital injections and the restructuring of high risk institutions, the China Banking and Insurance Regulatory Commission (CBIRC) said in a statement Friday. Other steps include setting up a resolution fund and bridge banks while introducing new investors and allowing market-oriented exits.

Many of China’s 3,000 small banks are coping with bad loans, prompting the government to crack down on risky funding practices. Small, troubled banks pose a risk to the Chinese economy, analysts say.

The banking regulator will gradually lower the risks of shadow financing by reducing non-compliant investments in non-standard assets, while insurance institutions will clean up multi-layered investment and leveraged transactions between related parties, it said.

The CBIRC will also increase risk management in areas such as real estate. It will make sure housing deals are not for speculation and prevent capital from flowing illegally into property markets. Moreover, it will continue to resolve the hidden debt risk of local government bonds.

The regulator is encouraging the conversion of household savings into long-term capital investment and the greater development of corporate annuity and endowment insurance businesses.

The CBIRC wants wealth management, insurance and trust products to be directly involved in financing and cultivate long-term value investment opportunities.

In another development, the CBIRC has released new rules which make it easier for foreign lenders to enter the Chinese market.

The measures cancel the total asset requirements for foreign banks to set up businesses in China and relax limitations on shareholders of joint venture lenders, according to a notice posted on the CBIRC official website late Friday.

Foreign lenders will also be able to open both branches and wholly foreign-owned banks at the same time in China, it said.

Meanwhile, the requirements for equity management and anti-money laundering and anti-terrorist financing have been tightened, it added.

China said in October it planned to remove business restrictions on foreign banks, brokerages and fund management firms. (SD-Agencies)