Xi Jinping instructed China’s state-owned enterprises to lower their debt levels but stopped short of announcing the creation of a new financial super-regulator to rein in mounting risks in the sector, as some had expected.

“Deleveraging at SOEs is of the utmost importance,” the Chinese president said at this weeked’s National Financial Work Conference, which convenes only once every five years. He added that the country’s financial officials must also “get a grip” on so-called “zombie” enterprises kept alive by infusions of cheap credit. 

Vigilance against mounting financial risks has become the top policy priority for Mr Xi, who wants to ensure economic and social stability in the run-up to a Communist party congress that will mark the beginning of his second five-year term. In April he convened a special meeting of the party’s 25-member politburo on the subject, saying that “we cannot neglect any risk factors or hidden dangers”.