Beijing has replaced three of its top financial regulators in a move designed to ensure a steady economic course loyal to the Communist Party’s vision through potentially troubled times.
The shuffle was sparked by the mandatory retirement of the heads of the China Banking Regulatory Commission and the China Insurance Regulatory Commission. The well-established technocrats selected to replace them have been portrayed as the first wave of a wider leadership shuffle that culminates in next year’s transition to a new Chinese president and premier.
Shang Fulin has moved from the China Securities Regulatory Commission to the banking commission; Guo Shuqing has moved from China Construction Bank to replace Mr. Shang as head of the securities commission; and Xiang Junbo has left the Agricultural Bank of China to head the insurance regulator. All are protégés of the same former Chinese premier, Zhu Rongji, and all have worked together for more than two decades, says political scientist Victor Shih of Northwestern University. “It does make the financial policy team in China quite coherent…They want foreigners to believe the financial policy making team remains very competent, internationally known and trusted,” Mr. Shih said.
It also means that financial reform is likely to continue at a very measured pace. In coming months, these three men will cope with major banks under heavy pressure from bad loans, a growing shadow-banking industry which has resulted in unpayable loans and the virtual collapse of industry in several cities, and fears of a real estate bubble about to burst.
“[These replacements] reflect a growing concern on the part of the current Chinese leadership that financial policies here -- especially in an uncertain international environment -- must remain in the hands of officials they trust and continue to be tightly supervised by the Party,” wrote Beijing-based political analyst Russell Leigh Moses in e-mailed comments.