China will set up a national financial regulatory administration, according to a plan submitted Tuesday to the national legislature for deliberation, in the biggest overhaul of the country's financial supervisory apparatus in years.

The China Banking and Insurance Regulatory Commission (CBIRC), the country's banking and insurance watchdog, will be abolished, with its role of regulating sections of the financial market falling under the new body.

The proposed administration, directly under the State Council, will be established based on the CBIRC, the plan said. It noted that certain functions of the People's Bank of China (PBOC) and the China Securities Regulatory Commission (CSRC) will be transferred to the new administration.

The plan to establish a new national financial regulatory administration could promote better regulation of the market and the behavior of its players, Pang Ming, chief economist and head of research for Greater China at JLL told CGTN. 

"The reshuffle of the government structure reflects policy priorities set by the new leadership of the country, including boosting tech self-reliance, addressing aging society problems," said Pang. He said he expects direct financing, which is typically a crucial funding channel for private and smaller companies, to receive greater focused support together with the help of the registration-based listing reforms under the CSRC.

Meanwhile, Gao Ruidong, chief macroeconomist at Everbright Securities told CGTN that the reforms can help the country better regulate and guide financial institutions at the micro level, strengthen the international competitiveness of China's financial industry, and help the industry forestall and manage potential systemic risks.

"It is worth noting that in this institutional reform, the CSRC has not been included in the new financial regulatory body, but the relative independence of securities supervision has been maintained. It borrows experience from regulation practices of foreign countries, and is also a policy consideration for fostering the further development of direct financing market." he added.

The move will "definitely" bring unification of supervision standards, said Wen Fan, deputy head of fixed income investment at ICBC Asset Management.

"Though details are yet to be confirmed, I believe it's a good sign that a consolidation of the regulation can further improve market stability," he added.

China's financial sector is currently overseen by the PBOC, the CBIRC, and the CSRC, with the Financial Stability and Development Committee having overall purview.

(With input from Xinhua, Reuters)