Former Bank of China chief Xiao Gang has been chosen to replace Guo Shuqing as chairman of the nation’s securities regulator CSRC.
It forms part of a reshuffle of senior finance figures carried out on the back of China’s political transition to new Communist Party leadership under president Xi Jinping.
The CSRC had initially said it had no information when Guo’s pending departure was reported in local media last week, although the news was eventually confirmed this weekend.
Before Guo’s exit was revealed, the China Securities Regulatory Commission released no fewer than nine documents from Thursday to Saturday ranging from consultation papers to new regulations.
These cover the spectrum of China’s funds industry, from e-commence platforms to fund sales to allowing securities firms (i.e. non banks) to act as custodians.
And that’s not to mention announcements earlier this month on the expansion of the RQFII scheme and proposed revisions to extend the country’s QDII programme.
It is this framework that sets out a road map for Xiao to follow, and local media reports have since quoted him as saying he will maintain policy continuity, which market observers broadly expect.
“China’s market liberalisation will not halt because of a change in the chairman of CSRC,” notes a senior Beijing-based fund manager. Describing Xiao as conservative, he expresses confidence that progress will be made on reform, whether fast or slow.
Shortly after the documents were released, it was announced that Xiao Gang had resigned as Bank of China chairman in a filing on the Hong Kong Stock Exchange. The 55-year-old has been Bank of China chairman since 2003, before which he was deputy governor of the People's Bank of China.
Well known for his outspoken views on China’s shadow banking system, last year Xiao penned an article on wealth management products, likening them to a giant Ponzi scheme.
Guo, meanwhile, is expected to be unveiled as the new governor of Shandong province, succeeding Jiang Daming, who has been named head of the land and resources ministry. Chinese media have also reported that Guo would exit CSRC to head sovereign wealth fund CIC.
The latest reshuffle announced by the National People’s Congress saw CIC chairman Lou Jiwei named finance mister. It remains unknown who the next chairman will be. Meanwhile, Zhou Xiaochuan, governor of People's Bank of China, will remain in position even though he has reached the retirement age of 65 years.
Regarded as a capital market reformist, Guo was appointed CSRC chairman in October 2011, meaning he has spent just 18 months in the role – the shortest reign of any of his past five predecessors. Shang Fulin headed the securities regulator for nine years before becoming chairman of the China Banking Regulatory Commission (CBRC), to be succeeded by Guo.
But Guo has opened up China's capital markets by overseeing the expansion of the country's QFII and RQFII programmes during his brief tenure. As at the end of February, $40.8 billion had been handed to 186 QFII licence holders.
In the latest move, nine QFII and RQFII licence holders were granted a total of $850 million in fresh quota: BlackRock, E fund (Hong Kong), Harvest Global Investment, China Asset Management (Hong Kong), Citic Securities International Investment Management (HK), Henderson, Hana Daetoo Securities and British Columbia Investment Management Corporation ($100 million each), with OrbiMed Advisors granted $50 million.