Lee Bok-hyun, governor of the Financial Supervisory Service (Newsis)

Lee Bok-hyun, the governor of South Korea's Financial Supervisory Service, made an unannounced two-day visit to China last week, marking the first visit there by an FSS head in six years.

During his visit to Beijing on Aug. 31 and Sept. 1, Lee met with Li Yunze, head of China's National Financial Regulatory Administration, to discuss ways to strengthen financial ties and cooperation between the two nations.

“China previously had various supervisory divisions, but it did not have a unified regulatory body overseeing the financial sector. The purpose of Gov. Lee Bok-hyun's visit was to meet with the head of this newly established agency," an official from the FSS said.

China's National Financial Regulatory Administration, similar to Korea’s FSS, was established in March, consolidating responsibilities encompassing banking and insurance supervision, alongside investor protection tasks.

Experts in the field recognize the significance of the meeting between South Korean and Chinese financial authorities.

This importance arises not only from the fact that it signifies the first substantial interaction between the two sides since July 2017 but also because it occurred during a period of strained relations between South Korea and China, signaling a new chapter in the two countries' financial cooperation.

This tension between South Korea and China has been exacerbated after the leaders of South Korea, the US and Japan agreed to expand security and economic ties at a summit at the US presidential retreat of Camp David in August.

According to sources, FSS Gov. Lee and his Chinese counterpart Li discussed economic and financial developments in both countries, exploring areas where collaboration could be enhanced. They also emphasized the need for close cooperation on financial supervision issues in the future.

Lee’s visit is also significant, as South Korean financial authorities are at a critical juncture in their investigation of alleged fund mismanagement by three major asset management firms -- Lime, Optimus and Discovery.

The success of this investigation hinges on international cooperation, given suspicions of illicit fund transfers to foreign destinations.

Last year, the FSS uncovered 84 financial institutions that had engaged in irregular foreign currency transfers totaling $12.2 billion.

However, tracing funds routed to China has presented formidable challenges for the FSS.

Lee also met with Liao Lin, president of the Industrial and Commercial Bank of China, during his visit to China on Sept. 1.

In this meeting, Lee conveyed his congratulations to the ICBC on the occasion of its 30th anniversary of operations in South Korea.

He also requested the ICBC's corporate headquarters in China to increase support to broaden its Korean unit's role within the South Korean economy and financial landscape.

Meanwhile, South Korea and Japan are preparing to resume their routine financial supervisory meetings, which have been put on hold since 2017, according to sources on Thursday.

South Korea's Financial Services Commission Chairman Kim Joo-hyun is slated to visit Japan in early October. Since Kim's visit follows FSS head Lee's recent visit to China, industry insiders expect the meeting to bolster regional financial cooperation.

The FSC on Thursday refrained from confirming any details regarding the meeting in Japan.

"There are ongoing discussions with counterparts, and no decisions have been reached as of now," an FSC official said.