Administrative Guidance In China's Banking Supervision

Recent years have seen the rapid development of administrative guidance, reflecting the worldwide evolution in the field of administrative law and public administration. However, due to lack of coercive power which is always regarded as one of the key characteristics of administrative acts, quite a lot furious disputes have arisen. From the very beginning, the China Banking Regulatory Committee(CBRC) has issued a series of supervisory guidelines, adopting advanced practices from Basel Committee and developed countries and areas like Hong Kong, U.K. and U.S.A.. Unfortunately, these guidelines have not yet lived up to the expectation. This paper describes the current situation of administrative guidance in banking supervision in China, analyzing the existing problems and putting forwards some suggestions.Chapter 1 describes the application of administrative guidance in banking supervision both in China and abroad. Since late 1970s the tendency of deregulation in public administration has greatly influenced banking supervision. Moreover, the rapid development of derivative instruments in financial market has justified the spread of administrative guidance in banking supervision. Supervisory guidance, warning of risk, prudential meeting, supervisory suasion and advisory letters are the main forms of administrative guidance.Chapter 2 discusses the existing problems of administrative guidance in China's banking supervision. The well-designed supervisory guidelines have failed to meet the expectations. Why? On the one hand, CBRC has not completely understood the non-coercive nature of administrative guidance, neither has it thoroughly understood the private spirits such as equality and autonomy of will embedded in the administrative guidance. Furthermore, CBRC are not fully aware of the differences between the legal system and legal environment in mainland China and those in Hong Kong. On the other hand, from a broader point of view, the poor performance of administrative guidance has reflected the deficiencies both in academic study and related legal framework. These are beyond the ability of CBRC.Chapter 3 puts forward suggestions on improving the administrative guidance in China's banking supervision. CBRC should clearly define the legal effect of supervisory guidelines as soon as possible, establishing the hearing and disclosure procedures as well as reasoning requirement. From a broader viewpoint, much more attentions should be paid on the application of principle of legitimate expectation in administrative guidance. Administrative guidance should be included into the draft Administrative Procedure Law. It is also necessary to modify the Administrative Proceedings Law to include the administrative guidance. Furthermore, the administrative appeal system should be in place. Taking into account the reality of unsatisfactory legal system and environment, it is better for CBRC and other government agencies to transform some administrative guidance into other types of administrative act.What is new in this paper? Although progress has been made on the academic study of administrative guidance, deep analyses on the problems existing in the administrative guidance practices are still rare. To the author's knowledge, so far there is no paper or book concentrating on the administrative guidance in China's banking supervision. The paper is hopefully to pioneer in this field.