(Yicai Global) June 14 -- The main priority for China's new banking and insurance regulator is to solve such problems as debt default, very low cost for enterprises' violation of regulations and tightening weak financial processes, said the head of the regulatory body.

Deleveraging and mitigation of financial risks are a long-term battle, and that we shall gradually step up the measures while fully taking into account the tolerance of the market, said Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, CBIRC.

Guo made these remarks in a keynote speech at the 10th Lujiazui Forum which opened today. Guo, who is also party secretary of the People's Bank of China, and Chairman of the CBRC and CIRC, also touched upon a range of key issues such as prevention of risk, financial openness and regulation of the wealth management business.

China's regulators always prefer institutions to carry out their own self-inspection first to be followed by supervision by administrative authorities, Guo said.

As for the business of banks and other financial institutions, regulators may start from peer wealth management and peer investment and focus less on interbank deposits and interbank certificates of deposits, he said. In the off-balance-sheet business, the entrustment loans and trust loans have not been regulated until the beginning of this year. Such methods as "rigid uniformity" and "hard braking" were not adopted, he noted.

Guo said debt default is normal in the market-oriented economy. Although enterprise debts are dominant, compared with those of foreign countries, China's enterprises still maintain a lower default rate of debts.

The regulator shall conform to the market-oriented rule, implement differentiated financial policies, and make the enterprises which suffered from long-term loss and lost the solvency withdraw from the market uncompromisingly, he said. For those enterprises that go through temporary operating difficulties, related parties shall enhance communication and negotiation and help them overcome such difficulties.

No matter financial or non-financial, all enterprises should know that manipulation of accounts is an illegal criminal activity, Guo emphasized.

Editor: Mevlut Katik