China's insurance regulator announced on Feb. 23 plans to assume temporary control of the embattled Anbang Insurance Group, which is struggling to repay investors following its massive global buying spree. China's Insurance Regulatory Commission and other regulators will establish a working group to operate the $310 billion conglomerate — the country's biggest insurer — until Feb. 22, 2019, although authorities could extend the period by 12 more months if necessary. Authorities have also charged Angbang founder Wu Xiaohui with "economic crimes."
The action against Anbang follows the launch of Beijing's large-scale campaign to regulate risky behavior in the country's financial system. The efforts have included restructuring entrenched financial bureaucracies, restricting shadow financing, de-leveraging indebted state-owned corporations and curbing capital outflows. The crackdown has focused on several private conglomerates, such as the Dalian Wanda Group, HNA Group and Anbang, forcing the entities to either scale back or sell off their overseas assets.
Large conglomerates in the country have historically operated with a high degree of autonomy and have had major political influence, but Beijing's crackdown could spell the end of that model. Like many other conglomerates, Anbang built its empire upon its numerous political and financial connections, which enabled it to influence the capital market. Under this model, conglomerates acted as proxies for political factions. For this reason, the crackdown on these conglomerates is an extension of Beijing's sweeping — but often unrecognized — campaign to reshape the relations between the central government and regional, bureaucratic and sectoral powers under Chinese President Xi Jinping. Under Xi, a more assertive central government has begun to chip away at the financial and economic autonomy enjoyed by local, sector-based and industrial players. In taking over Anbang and cracking down on other conglomerates, China's government is shoring up its power — a trend that is only likely to continue.
