Banking & Finance

Resigned to bad news

Wholesale shake-up looms for financial regulators

xiao gang

In the spotlight: Xiao Gang

The most high profile sacking of 2015 was probably of football coach Jose Mourinho. He was axed as Chelsea manager last month, and during a trip to Shanghai this week his possible career moves were grabbing headlines again.

Other events in Shanghai – involving a stock market plunge – were reported to have led to another high profile job exit this week. Only in this case what’s going on is far less clear cut.

It centres on Xiao Gang, the head of the CSRC, China’s stock market regulator. Reuters reported this week (citing unidentified sources) that he had handed in his resignation, taking responsibility for the market turmoil this month surrounding the introduction (and swift withdrawal) of the circuit breaker system (see WiC308).

Not so fast. The CSRC swiftly issued a rebuttal stating that the report “does not accord with the facts”. The regulator said it had contacted Reuters and demanded a correction. And to confirm Xiao’s ongoing tenure the state broadcaster CCTV showed footage of him attending a seminar for high level cadres.

Nevertheless Chinese media is also reporting that a regulatory shake-up is underway. The increasingly haphazard and uncoordinated activities of various financial regulators will be addressed with the creation of a new body that will have oversight over them all. According to Time Weekly the State Council has created a new secretariat to coordinate and improve communications between the banking, securities and insurance regulators.

It has already appointed Li Zhenjiang, a senior banker with Agricultural Bank of China, to be the deputy chief of the new unit. Speculation has now focused on who will be the organisation’s boss, and (it would seem) China’s top financial regulator.

All bets seem to be on Huang Qifan, says Phoenix Finance. The current mayor of Chongqing may not seem the natural choice – having never worked in banking – but does have long connections with the world of finance. He was formerly a senior official in Shanghai where he oversaw the transformation of Pudong from farmland into a financial centre.

Huang looks to have survived the fallout from the purge of his former boss in Chongqing Bo Xilai. Indeed, on January 4 Xinhua reported that President Xi Jinping had made his first visit to the megacity since becoming China’s leader and in a telling optic was photographed being shown around by Huang, and reportedly told the mayor he was very impressed with what he saw.

Netizens have commented that Huang’s suspected new role carries such a senior rank that it needs to be approved at the next Politburo meeting, which explains the delay in announcing it.

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