2/24/2016

Stepping Down


HONG KONG — China’s top securities regulator, Xiao Gang (above), has been forced out, the official Xinhua News Agency announced on Saturday, after facing stinging criticism for amplifying the country’s stock market turbulence.

The move reflects the increasing pressure on the Chinese leadership to bolster confidence at home, as questions mount about Beijing’s ability to manage the economy, the currency and the markets.

Just days ago, Prime Minister Li Keqiang castigated the country’s financial regulators for their handling of a steep plunge in stocks since last June and an erosion in the value of China’s currency.

The China Securities Regulatory Commission, led by Mr. Xiao, 57, has taken a big dose of blame for the problems.

He attracted significant criticism for allowing a speculative bubble to form, in which share prices more than doubled in a year. 

When it burst last summer, those shares gave up all of their gains, hurting millions of families who had borrowed heavily to buy stocks.

As stocks sank, the regulator also intensified the market mayhem. 

Two measures, intended to stabilize stocks, have been widely blamed for producing a week long rout in China’s stock markets during the first week of January that unsettled investors around the world.

Mr. Xiao defended himself in a long statement on his agency’s website in mid-January, analyzing the causes of his country’s recent financial sector difficulties. 

He said the turbulence in China’s markets, including another nose dive in share prices last summer, was partly caused by the inexperience of investors and the immaturity of the local market.

But he also conceded that recent troubles reflected an “imperfect trading system, flawed market mechanisms and inappropriate supervision systems,” together with an exodus of seasoned personnel from his agency.

Mr. Xiao, who also lost his post as the regulator’s Communist Party leader, will be succeeded as chairman and party leader by Liu Shiyu, 54, chairman of the Agricultural Bank of China and a former deputy governor of the People’s Bank of China, according to the news agency.

Mr. Liu was trained in engineering at Tsinghua University, but started a career in the state banking sector in the 1980s, according to the news agency.
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