China Removes Top Securities Regulator

Amid economic turmoil in China as the country struggles to adjust to decreased growth rates, China Securities Regulatory Commission Chairman Xiao Gang has been removed from office. The regulatory official was likely let go due to public backlash against the slowing of the Chinese economy last year, though the Chinese government itself has not specified its reason for removing him.

A recent program instituted by Xiao was likely the final cause of his removal. In January, his department instituted what has been nicknamed a “circuit breaker” rule on the Chinese stock markets. This was intended to stop losses in the value of stocks by shutting the exchanges down if the markets overall declined beneath a predetermined point. The net effect, however, was that investors could no longer determine the value of shares, leading to massive selloffs amid a complete crash of investor confidence. The program was ended after just four days, and has been seen as one of the worst attempts China has made to keep its markets and growth rates artificially high.

According to China’s state-owned Xinhua news service, the departing chairman will be succeeded by Agricultural Bank of China Chairman Liu Shiyu. Liu, also a former official of China’s central bank, is also a formally educated economist who is expected to bring a more traditionally market-oriented approach to the problems currently facing the Chinese securities market. Many have argued, however, that Liu will be unlikely to effect large changes in Chinese market policy so long as the Communist Party of China continues to push for sustained state control of the economy, which many economists have cited as the root cause of the massive slowdown of 2015.

Liu has already taken his new post at the head of the securities commission, and is expected to begin laying out the course that his policies will take over the next six months. Although slowing, China’s economy is still among the fastest-growing in the world, leaving little chance of a recession beginning on Liu’s watch. Even with the massive drop of markets and commodity consumption, the Chinese economy maintained a growth rate of 6.9 percent in 2015.