BEIJING (Reuters) - China will steadily reduce the number of high-risk institutions to help fend off systemic financial risks，its central bank said on Wednesday
Reforms of problematic small and mid-sized financial institutions have made key progress and illegal financial activities have been curbed, the People's Bank of China (PBOC) said in a statement after its annual meeting on financial stability.
The central bank will continue to follow the guidance of "overall planning and coordination, differentiated policies and precise bomb disposal", it said.
"It is necessary to strengthen the financial risk disposal mechanism and capacity building, strengthen monitoring, early warning and evaluation," the central bank said.
The central bank will improve legislation and the financial stability guarantee fund system, and improve the role of deposit insurance, the central bank added.
China's economy showed a gradual though uneven recovery in the first two months, but statistics bureau spokesman Fu Linghui told a briefing on Wednesday that corporate and personal balance sheets damaged during the pandemic would need time for repair.
Central bank chief Yi Gang told a news conference on March 3 that China has reduced the number of high-risk small- and medium-sized financial institutions to more than 300 from over 600 over the past three years.
The government has unveiled plans to set up a new regulator - the National Financial Regulatory Administration - which will take over some regulatory responsibilities, including overseeing financial holding companies and investor protection, from the PBOC.
"The revamp signals a shift in the government’s priority towards financial stability and de-risking the financial exposure of local governments and financial institutions," ANZ analysts said in a note.
"Local governments’ explicit debts have increased 16% year-on-year over the past five years. Their implicit debts may have reached 60 trillion yuan ($8.69 trillion), or half of China’s GDP, according to our estimates," ANZ said.
($1 = 6.9020 Chinese yuan renminbi)