Xi ordered a review of the financial sector, foreign media said directly into Wang Qishan’s sphere of influence

The Wall Street Journal cited sources familiar with the matter as saying that Xi Jinping, the Communist Party’s general secretary, has issued a directive to the Central Commission for Discipline Inspection to review at least 25 state-owned banks and other financial institutions, asking them to clarify their ties to large private companies. The report also said that the financial sector is the sphere of influence of Vice President Wang Qishan, with whom many financial executives have close ties, and that a loan to HNA from China Construction Bank, of which Wang was once president, is expected to be part of the new round of reviews.

Reports suggest that the next wave of regulation will be on the financial sector, after the regime launched earlier on large technology companies, and that the current regulatory measures will be the largest since Xi Jinping took office nearly a decade ago and will cover all sectors.

On September 26, the official website of the State Supervision Commission of the Central Commission for Discipline Inspection released the news that the eighth round of inspections of the 19th Central Committee will carry out regular inspections of 25 financial institutions, including the People’s Bank of China, the China Banking Regulatory Commission, the China Securities Regulatory Commission, the China Development Bank and the Export-Import Bank of China.

After the 19th National Congress, the central government has carried out seven rounds of inspections, each with a different focus. The current inspection is the first time after the 19th National Congress that the central government has carried out inspections in the financial sector.

Since the beginning of the year, at least 23 senior executives of financial institutions have fallen. These include Cai Ersheng, vice chairman of the China Banking Regulatory Commission, and He Xingxiang, vice president of the China Development Bank, as well as 21 executives of financial institutions.

In China, the financial sector is the sphere of influence of Vice President Wang Qishan, who gained prominence while running state-owned China Construction Bank Corp. in the 1990s, placing people close to him in key positions at state-backed financial firms, including China Construction Bank, over the years.

It was noted that during Xi’s first term, when Wang Qishan was secretary of the Central Commission for Discipline Inspection, Wang largely avoided investigations into the financial sector. But China’s financial risks have been increasing, in part because of aggressive lending by state-owned banks to some well-connected corporate executives.

The Wall Street Journal also said Wang Qishan’s political influence has declined in recent months. One of his longtime aides was accused in August of taking more than $71 million in bribes. Wang Qishan has ties to some of the financial firms now facing scrutiny, according to people familiar with the scheme.

China Construction Bank, for example, has helped finance overseas acquisitions by conglomerate HNA Group. HNA Group’s chairman Chen Feng, a former aide to Wang Qishan, declared bankruptcy last year amid a heavy debt load. HNA disclosed in late September that Chen Feng had recently been detained on suspicion of a criminal offense.

A loan from China Construction Bank to HNA is expected to be part of a new review, the people said.