BEIJING - When China's top leaders emphasized efforts to control financial risks last year, few expected policymakers would go so far and hard in its financial clean-up for 2017.

In what some dubbed the "toughest year" for China's financial industry, the hand of regulation is everywhere, be it in traditional institutions like banks or emerging Internet finance businesses like micro lenders.

The hardline stance is set to continue. At the Central Economic Work Conference, which concluded Wednesday, senior leaders agreed to maintain the resolute crackdown on irregular and illegal activities in the financial sector to forestall risks.

"The meeting sent a signal that regulations on the financial industry will further tighten as a healthy and stable financial market is key for China's sustainable development," said Yang Zhiyong, a researcher with the Chinese Academy of Social Sciences (CASS).

Regulation storm

Throughout 2017, authorities have taken real steps to curb widespread malfeasance in the rapidly expanding financial market.

Banks, insurance and securities companies have received heavy fines for flouting market rules, and Internet finance companies once prospering on easy and fat profits are having a difficult time to survive with the enhanced rules.

In the first ten months, China's banking regulatory authorities imposed administrative penalties in 2,617 cases of irregularities in the industry, with fines totaling 667 million yuan ($101.4 million) for State-owned banks, joint-equity banks and city commercial banks.

Shadow banking, one of the most dangerous risk points for China's economy, is being put under greater scrutiny as regulators tighten their grip on interbank activities and off-balance-sheet wealth management products.

For loosely regulated emerging businesses, Chinese regulators earlier this month specified new rules to clean up the cash loan, or micro lending, market, which dealt a heavy blow to stock prices of China's micro lenders.

The regulation storm is producing the desired results: the non-performing loan ratios of commercial banks are stabilizing, corporate debt is coming down, and irregular financing activities in the property market are being effectively curtailed.

Considering the complexities and size of China's financial market, policymakers have also decided to create a new committee for financial stability and development to enhance inter-agency coordination.

In a recent interview with Xinhua, Ratna Sahay, deputy director of IMF's monetary and capital market department, said if Chinese authorities were able to address potential concerns such as rapid credit growth and complex financial products, the country could go through the transformation process safe and sound.

Tough times ahead

The latest message from China's top leadership is that there will be no let-up in the crackdown.

Prevention of financial risks is key for China to win what central authorities have called the three tough battles, namely controlling risks, reducing poverty and tackling pollution.

In the coming three years, China will seek to foster a "virtuous circle" between finance and the real economy, between finance and the property sector as well as one within the financial system, according to the statement.

Compared with the statement from last year, analysts have noticed the absence of "deleveraging" in the wording.

"Although the statement did not mention deleveraging, financial risk control is still a priority given that defusing major risks is one of the three tough battles that the country vowed to fight," said a research note from a team under the China International Capital Corporation.

"While short-term vulnerabilities in the financial market have been partly patched up, China needs to foster a long-term mechanism to provide more solid support for risk prevention," said Zeng Gang, a CASS researcher.