Editor’s Note:This article is an experience-sharing work written by Professor Xu Duoqi of the Koguan Law School at invitation, and we can feel her academic curiosity, enthusiasm and perseverance between the lines. In collaboration with Professor Emilios, an internationally renowned scholar, she published a paper in English entitled “Overhauling China’s Financial Stability Regulation” in 2017, in which she proposed recommendations that happened to have the same view with the reform ideas of the supervision mechanism for financial institutions in the State Council’s 2018 institutional reform program to a large extent. The coincidence is indeed very exciting. We are looking forward to her new and greater achievements in cross-discipline research and collaborative research between Chinese and foreign scholars, and it is also expected that readers can get inspired by this article and feel the charm of international cooperative research.

Emilios Avgouleas is the Chair Professor of International Banking Law and Finance at the University of Edinburgh and the Founding Director of the Master of Laws at the University. He has delivered keynote speeches and annual lectures at some renowned academic institutions (Yale, Tsinghua, Oxford, Cambridge, HKU) and think tanks (Chartham College, Bruegel, CIGI), and has been invited to express his views on related policies at the influential public policy agencies such as Bank of England, Basel Committee, European Council, the Federal Reserve (Fed) and Singapore Monetary Authority, etc. He has published a large number of articles and books in the areas of finance, law and economics, banking theory and regulatory policy, systemic risk and behavioral finance, etc., and has been elected as the member of stakeholders’ group of European Banking Authority (EBA), the “Top” academic sector, boasting outstanding reputation.

I got acquainted with Professor Emilios at the academic meeting “The Political Economy of Financial Regulation” held on the 10thanniversary of the Faculty of Law of the Chinese University of Hong Kong during July 2-4, 2016. Professor Emilios was the keynote speaker and I attended the meeting as one of the invited speakers. I forgot to register for lunch due to the busy schedule, I was arranged to sit beside Emilios to have lunch and communication. There were also Professor Ugo Pagano, a well-known Italian economist who loved Chinese history, and Professor Katharina Pistor, who cooperated with Professor Xu Chenggang and is known for his “incompleteness of law” theory derived from the “incomplete contract” of the Nobel Prize Winner Professor Hart. Several academic academics from the United States, Italy and the United Kingdom launched an impromptu academic discussion at the dinner table, ranging from the debt crisis in Europe to the prospect of global regulation of financial law, from the difficult problems of financial market in developed country to the bad assets, shadow banking and other issues in developing countries, which greatly widen my horizon.

Professor Ji Weidong, Director of Koguan Law School at that time, who was the co-editor of the English journal Asian Journal of Law and Society, happened to entrust me to invite Emilios to give a lecture at Shanghai Jiao Tong University, and specially make an arrangement in advance with him for his contribution in financial law as the primary article in Issue 1 of the Journal in 2017. When I was accompanying him on his way back to Shanghai, I talked about this matter and surprisingly he gladly agreed despite his busy schedule. Fulfilling this task unexpectedly made me especially happy.

One month later, I visited Harvard for a year as a Fulbright visiting scholar. During that period, Emilios was invited by the Fed to give a keynote speech, taught at the Yale Law School, and paid an academic visit to Harvard University, which gave us the chance to meet for many times.Every time when we met, in addition to talking about the culture, economy, laws, and history of various countries, I took the opportunity to prompt him for the contribution. Emilios mentioned that he could quickly complete the task by writing a paper about Europe or the United States, but the Asian Journal of Law and Societywas an Asian law journal, so a paper themed by Asian or Chinese issues would be the best. Therefore he proposed that, in order to study China more deeply, we could cooperate to write an article about financial law. If I was fortunate to cooperate with an international academic master, of course, it would be a great learning opportunity, so I was glad to accept the proposal and started collecting information and writing the part about China. We discussed repeatedly by email, etc. When he came to Harvard, we all met to discuss the ideas and writing of the article, no matter how busy we were. Finally, on the basis of reading a large number of reports from various international organizations and Chinese and English literature, the long paper “Overhauling China’s Financial Stability Regulation: Policy Riddles and Regulatory Dilemma” was finally completed and published in the 2017 Issue 1 of Asian Journal of Law and Society.

In the article, we proposed that the new round of rapid growth of non-performing loans and the shadow banking were two aspects of China’s financial stability risks. To improve financial stability, we must carry out a major reform of financial regulation, so that the dilemma resulting from current separated financial regulation could be eased. In order to remedy the fragmented methods of system supervision and respond to China’s current financial stability challenges, we proposed to abolish separated supervision and administration. The implementation of specific plan involves imitating the UK’s Financial Services Authority (FSA) tomerge the China Banking Regulatory Commission and China Insurance Regulatory Commission into a micro-prudential authority, because there is no silo effect between banks, investment companies and insurance companies. As part of the reform steps, weproposed to transform the China Securities Regulatory Commission into a commercial activity and consumer protection authorityto be responsible for the protection of investors and to supervise market abuses and violations in implementing the law to control securities. We also proposed the establishment of a macro-prudential authority (including the Governor and Deputy Governor of the People’s Bank of China, the Minister of Finance, the head of the micro-prudential and commercial activity authorities as well as the head of resolution authority/deposit guarantee authority)in the form of an intermediate or senior financial stability commission of the People’s Bank of China.The macro-prudential commission has the highest authority to use the financial stability data in all aspects, including data on emerging risks and risk exposure level in shadow sector.In order to facilitate the information processing, the People’s Bank of China will open and operate a registration center,to which all litigations and counterclaims in the shadow sector will be reported. Contemporary data mining tools can make this registration center more useful than ever, and become an essential tool for monitoring emerging risks, especially mapping relevance.

In addition to publish the article in English, since the views in this article are rather unique and somewhat forward-looking, Emilios suggested that I shorten my English article and publish it in Chinese in a Chinese periodical. Subsequently, I drastically deleted and modified the article, and finally formed a Chinese law paper of less than 15,000 characters. Entitled “Legal Framework of China’s Financial Stability Regulatory Changes”, this article was published in the 2017 Issue 5 of the Law Forum.

At present, the institutional reform of China’s State Council is in full swing, and the financial regulatory authority reform program therein has provided the practical responses to the opinions and suggestions in our article.In July 14-15, 2017, the National Financial Work Conference was held in Beijing. At the conference, the establishment of the State Council’s Financial Stability and Development Commission was specified. In November, the Commission was established and held its first meeting. On March 13, 2018, the State Council’s institutional reform program was submitted to theFirst Session of the Thirteenth National People’s Congress for consideration. In this program, it is proposed to integrate the responsibilities of the China Banking Regulatory Commission (hereinafter referred to as the “CBRC”) and the China Insurance Regulatory Commission (hereinafter referred to as the “CIRC”), and form the China Banking & Insurance Regulatory Commission as a directly-affiliated institution under the State Council. The former responsibilities of the CBRC and the CIRC in formulating the important draft laws and regulations on financial supervision and the basic system of prudential supervision will be transferred to the Central Bank. The People’s Bank of China will shoulder the dual-pillar control mission of implementing monetary policy and performing macro-prudential supervision duties. The China Banking & Insurance Regulatory Commission and the China Securities Regulatory Commission will become the regulatory authorities that conduct activity supervision and protect consumer rights under the guidance of the State Council’s Financial Stability and Development Commission and the Central Bank. After the 15 years’ operating in China, the separated supervision mode of “one bank and three commissions” will come to an end. Our proposal surprisingly corresponds to the aforesaid reform program to a large extent, which makes me excited.

Thanks to the pleasant academic cooperation experience, Professor Emilios has invited me to attend the international high-end academic conference “Information and Technology Revolutions in Capital Markets” held on March 22, 2018 in London, England, at which three universities will discuss jointly,allowing me the opportunity to learn from the chair professors of the three universities and the persons in charge of the activity supervision commissions and to give a keynote speech at the conference. Once again, I have the opportunity to enrich, replenish and improve myself in international academic exchanges.

In a word, this interesting experience of international cooperation in academic research has made me feel the great charm of knowledge “complementing advantages”, “cooperation and win-win” method and “global innovation” perspective. Academic innovation is the life of academic research. In the Internet technology era featured by rapid development of globalization, the study on “localization” of Chinese issues must be based on the exchanges and dialogues between domestic academic research and international academic research. I am fortunate to cooperate with the world-recognized famous experts in financial law like Professor Emilios, discuss and compare solutions to financial regulatory difficulties in different countries, analyze the deep roots behind them, and learn and discuss the classics of finance and financial law with them, and these have become the most valuable academic experiences and wealth in my life. I will continue to work hard, learn Emilios’ tireless spirit of research with full academic enthusiasm, invest my energies in truly valuable researches, and strive to make more research achievements that are forward-looking and conducive to the national construction and social development.